Canadian economic growth started the year a lot slower than the already diminished expectations of most economists. Real GDP growth for the first quarter registered just 0.4 per cent, matching the meager growth of the previous quarter. A strong recovery in household consumption spending was offset by a decline in housing investment due to the B20 stress test and the lagged impact of rising interest rates in 2018. A drop in exports, the first decline since the third quarter of 2017, reflects a difficult global trade environment.
We are forecasting that the Canadian economy will expand between 1 and 1.5 per cent this year, a deceleration from 1.8 per cent growth in 2018. That slowdown, along with muted inflation will likely keep the Bank of Canada sidelined, particularly given the uncertain state of the global economy and the ongoing impact of the B20 stress test on the housing sector.
Copyright British Columbia Real Estate Association. Reprinted with permission.