Dec 1 , 2023: ‘Struggling to grow’: Canada’s economy shrinks in third quarter amid higher interest rates

In a sharp contrast to the robust growth in the United States, the Canadian economy tumbled over the summer as export shipments waned and consumer spending flattened, signs of a continuing malaise as the country grapples with higher interest rates.

Real gross domestic product fell at an annualized pace of 1.1 per cent in the third quarter, according to figures published by Statistics Canada. Canada’s economic performance increasingly diverged from that of the U.S., which posted a 5.2-per-cent expansion in the third quarter. The results were also considerably weaker than the Bank of Canada’s estimate of 0.8-per-cent growth and Bay Street’s expectations of a slim 0.1-per-cent increase.

Canada did, however, avoid two consecutive quarters of GDP decline – what some economists refer to as a “technical recession.” Statscan made sharp upward revisions to its second-quarter figures, which are now showing annualized growth of 1.4 per cent, where previously they showed a slight decline.