5 March 2019

Statistics Canada also revised previous numbers down, reducing the first quarter of 2018 to 1.3% and cutting the second one to 2.6%.

According to Statistics Canada, the fourth quarter slowdown was mostly caused by lower household and investment spending. It’s obvious that Canadian businesses still worry about global uncertainties, including the U.S./China trade relations, American tariffs and the oil prices decline. Canadian households with high debt levels are still adjusting to rate increases made in the summer of 2017. Another important factor was the downturn in the real estate market.

The forecasts for this year are quite low. Dropping tendency, the federal budget, and the October federal election will probably make the Bank of Canada take a pause in rate hikes until late 2019. The possibility of a rate cut is restrained by so far optimistic employment results.