The Canadian economy grew by 0.1 per cent in February, Statistics Canada said Friday.
In its latest report on economic growth, the federal agency’s preliminary estimate suggested real gross domestic product grew at an annualized rate of 2.5 per cent in the first quarter.
The February figure came in lower than was expected by Statistics Canada as wholesale and retail trade as well as manufacturing all contracted.
Boosting real GDP in February was growth in the public sector, professional, scientific and technical services, construction and finance and insurance.
Statistics Canada revised up its January figure for real GDP to 0.6 per cent.
The Canadian economy is expected to stall this year and potentially enter a recession as high interest rates weigh on consumers and businesses.
The Bank of Canada is holding its key interest rate steady at 4.5 per cent, the highest it’s been since 2007.
The federal agency’s preliminary estimate for March suggests the economy contracted by 0.1 per cent.
“After sprinting out of the gate to start 2023, the Canadian economy had already hit a wall by March,” CIBC economist Andrew Granthan wrote in a client note.
The expected dip in real GDP is driven by continued declines in wholesale and retail trade, in addition to mining and quarrying.
But Grantham said the new data shouldn’t change much for the Bank of Canada’s outlook.
“Until there are clearer signs that slowing growth is also helping to ease core inflation, the Bank of Canada will continue to lean towards raising interest rates, even if a hike is not ultimately needed, with rate cuts not coming until 2024,” Grantham said.