Yahoo Finance Canada’s Economy Grew Yet Again! Here’s What That Means for Investors
Written by Amy Legate-Wolfe at The Motley Fool Canada
It was a big week for investors, and not just from Big Tech earnings. Statistics Canada released reports this week that saw Canada’s economy grow more than expected, even higher than November data showed this week.
But what does this actually mean for investors? Let’s get into what happened and where investors may want to put their cash as the economy climbs back to normal.
Expanding
Gross domestic product (GDP) expanded 0.3% in December, according to Statistics Canada and their preliminary estimate. This would mean annualized growth of 1.2% during the fourth quarter compared to the GDP falling by 1.1% in the third quarter.
The big news here? The economy has avoided a technical recession. This would occur when there are two consecutive quarters of GDP falling year over year. However, this has now been avoided with GDP growth.
What’s more, that growth is coming in faster than expected from analysts. And all this while the central bank continues to consider reducing interest rates, now at 22-year highs. Once confirmed, that would also mean the economy grew faster than the Bank of Canada expected as well.
Not out of the woods yet
The Bank of Canada could continue to hold rates steady until at least closer to the middle of the year. One quarter of growth isn’t anything to sneeze at, but we’re not out of the woods yet. We’ll still need to see even more year-over-year growth in the future. So, if another drop in GDP happens during the next quarter, that could mean we could still enter a technical recession.
So, what can investors learn from these results? The biggest growth came from growth in purchasing of consumer goods. These sectors are influenced by exports, so should these results continue, it could be a good time to consider consumer goods once more.
But until inflation hits that 2% target, now at 3.4% for December, the interest rates offered today are ones I would take advantage of. So, before buying into any consumer stocks, perhaps consider picking up a Guaranteed Investment Certificate (GIC) with these ultra-high rates.
A stock to consider
A safe option these days would certainly be Dollarama (TSX:DOL). Dollarama stock continues to see consumers come their way for cheaper items, only increasing costs recently from inflation. That’s far later than most other consumer goods locations.
Moreover, even after inflation and interest rates come down, Dollarama stock is likely to continue doing well. More cash in the pocket means more to spend on the other less essential goods it offers — not to mention the store growth we’ve seen, along with the future possibility of acquisitions.
All in all, Dollarama stock looks like a safe, stable and growing bet for investors to take on. Shares are up 25% in the last year as of writing, hovering right at that three-digit mark! So, certainly consider this as one of the best stocks you can buy as the market continues to recover.
The post Canada’s Economy Grew Yet Again! Here’s What That Means for Investors appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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