Statistics Canada reported this morning that real gross domestic product (GDP) increased by 0.3% in the third quarter of 2024, following gains of 0.5% in both the second and first quarters. The federal agency noted growth in household and government spending, but declines in investment and exports.
However, GDP per capita decreased by 0.4% in the third quarter of 2024, marking a sixth consecutive quarterly decline.
The pace of economic expansion therefore remains in line with, or slightly below, the Bank of Canada’s forecasts, which anticipate GDP growth of 1.2% for 2024 as a whole. As a result, the Bank is likely to continue moving toward another reduction in its policy interest rate on December 11.
Labour market developments (employment and unemployment) for November, to be released on December 6, will be the final major indicator influencing the Bank’s decision on the magnitude of the rate cut. Opinions remain divided on this issue (-0.25 or -0.50 percentage points), but the shockwave created by the threat made earlier this week by the president-elect of the United States to impose significant tariffs on all Canadian goods could tilt the balance in favour of the larger cut.