Canadian economy stalls to end 2022, but pick-up seen in January

The recent stall was primarily driven by a significant drop in inventory investments, which fell from a record accumulation in the middle quarters of 2022. Many businesses have said they ordered too many goods as supply-chain issues wreaked havoc on global trade over the past two years.

The start to 2023 appears to be on solid footing. In a preliminary estimate, Statscan said real GDP jumped 0.3 per cent in January, following a 0.1-per-cent drop in December. The Bank of Canada projects the economy will stall over the first six to nine months of 2023, then pick up as the year closes. Governor Tiff Macklem says the country could experience a “mild recession,” a view that is echoed by many economists on Bay Street.

Tuesday’s GDP report showed people are still spending, despite the impact of higher borrowing rates. There was a large increase in the purchase of vehicles as supply chains improved.

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