Canada’s economy continues to grow despite higher rates
Canada continued to eke out growth in late spring and early summer, according to monthly GDP numbers released on Wednesday, showing continued resilience in the face of higher interest rates.
The economy grew by 0.2 per cent in May, following an increase of 0.3 per cent in April, Statistics Canada reported. Preliminary numbers showed a 0.1 per cent increase for June. The data suggest the economy may be on track for growth of more than 2 per cent in the second quarter, which would mark an acceleration from the first quarter pace of 1.7 per cent.
In fact, the pace of growth in May and April represented the strongest two-month gain in more than a year. While there are worries the expansion isn’t fast enough to absorb a sharp increase in population, the data don’t suggest an economy in distress.
The numbers are not so strong as to prevent the Bank of Canada from cutting interest rates further, but neither are they so weak as to create a sense of urgency from policy makers.
“Canada's economy is still walking that fine line of struggling to keep upright, but just staying out of serious trouble, consistent with continued, measured interest rate cuts,” Bank of Montreal chief economist Doug Porter said in a note to investors on Wednesday.
