Canada’s Economy Slows Down in Q4 Thanks to High Interest Rates

The Bank of Canada’s rising interest rates are slowing down the economy’s momentum, as GDP stalled for the first time in the final three months of 2022 following five straight quarters of growth.

Latest data from Statistics Canada showed that the economy expanded only 0.3% in the fourth quarter of 2022, following a 0.2% drop in the previous quarter. The figure comes in light of forecasts calling for an increase of 1.6% annualized growth, suggesting the high interest rate environment is taking a toll on Canada’s economy.

Putting downward pressure on GDP growth was a decline in businesses’ inventories, following two quarters of record-high accumulation of inventories. Real business investment also slumped in the fourth quarter, falling 7.8% and marking the third consecutive quarterly decline. The dismal figures come in light of borrowing costs rising to 4.5%, after sitting at historically low levels less than one year ago.

On the other hand, though, household finances improved, largely due to federal government benefits aimed at lower-income Canadians, including a GST tax credit top-up and a 10% increase in Old Age Security payments. In the fourth quarter, household disposable income increased 3%, while the household savings rate rose from 5% in the third quarter to 6%.


Information for this story was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Silver’s Finally Breaking the System | Keith Neumeyer – First Majestic

The Best News for Gold Was the Drop! – Peter Grandich

McEwen Copper: The Los Azules Feasibility Study

Recommended

Silver47 Completes Property-Wide Geochemical, Rock Sampling Program At Adams Plateau, Identifies Numerous Targets

Altamira Gold Identifies Presence Of Second Mineralized Porphyry Body At Cajueiro

Related News

Yield Curve Aggressively Inverts as Ongoing Fed Hikes Barrel Economy Into a Recession

The closely-watched Treasury yield curve dipped to the lowest level since the 1980s Volcker era,...

Saturday, November 12, 2022, 01:07:00 PM

US Consumer Prices Rise 3% In June

After rising 4% year-over-year in May, US inflation continued its descent last month, increasing 0.2%...

Wednesday, July 12, 2023, 08:37:13 AM

Canada’s GDP Growth Driven by Government Wage Increases

Canada’s economy showed modest growth in the second quarter of 2024, with real GDP increasing...

Friday, August 30, 2024, 12:59:00 PM

Economists Say Fed To Hike Rates By 75 Basis Points On November 2

Economists believe that the United States Federal Reserve will proceed with a fourth consecutive 75...

Tuesday, October 25, 2022, 10:21:46 AM

Can Canada Cut Rates Even As the US Holds Steady?

Bank of Canada Governor Tiff Macklem addressed the Canadian legislature’s finance committee on Thursday, discussing...

Friday, May 3, 2024, 12:50:37 PM