The federal data agency released its August GDP report on October 31, which found that rising interest rates, inflation, wildfires and drought were still weighing on the economy.
August was the second month in a row in which growth remained stable, and preliminary estimates indicate that the economy continued this trend in September.
For the third quarter, Statistics Canada’s preliminary estimates indicated the economy would contract at an annual rate of 0.1%, which would follow the contraction in the second quarter.
The report also revealed that 8 out of 20 industrial sectors grew in August, while growth in service production sectors was offset by growth in manufactured goods sectors.
Industries that have seen growth include wholesale trade, mining, quarrying, and fossil fuel extraction.
In its latest decision, the Bank of Canada decided to keep the reference interest rate at 5%.
Photo: La Presse Canadian/Sean Kilpatrick
Sectors such as agriculture, forestry, manufacturing, retail, accommodation and food services saw declines.
High interest rates are expected to continue to slow economic growth, especially as more families prepare to renew their mortgages at higher interest rates.
According to a recent forecast from the Bank of Canada, economic growth will remain weak for the rest of the year and into 2024.
The Bank of Canada’s benchmark interest rate remained unchanged at 5%, its highest level since 2001.
Lower spending resulting from higher borrowing costs is expected to help curb high inflation, which reached 3.8% in September.
The Bank of Canada expects annual inflation to return to the 2% target in 2025.
Source: RC/PC
Adaptation: RCI/R. Valencia
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