Canada Economic Growth (Nominal GDP, ann. var. %)

The economy flatlined in Q4 according to recent data, undershooting analysts’ expectations. However, the reading was dampened by a softer inventory accumulation, and underlying momentum was stronger than the headline GDP figure suggested; private spending, government spending and exports expanded, while fixed investment contracted at a softer pace compared to the prior quarter. Turning to Q1, early signs suggest robust activity in the face of tighter monetary policy. Flash data pointed to a 0.3% month-on-month GDP expansion in January. Moreover, in January–February inflation retreated and the unemployment rate remained at rock-bottom levels, which should be aiding private consumption. However, the rate-sensitive real estate sector remains downbeat, with housing starts and prices falling in January–February from Q4.