Yahoo Finance Economy posts strong growth in Canada for 2021, with a stall in the final lap
Canada’s economy grew 1.6 per cent in the fourth quarter of 2021, following a 1.3 per cent rise in the third quarter.
Statistics Canada says GDP grew 4.6 per cent in 2021, after the pandemic took a 5.2 per cent bite out of the economy in 2020.
The rebound was consumer-driven with household spending and residential construction contributing the most in 2021. Canadians spent more on food, clothing, and beverages as business reopened.
Working from home and low interest rates drove Canadians to plow more money into housing. New home construction, resales and renovations nearly hit all-time highs. Household mortgage debt was up 10.3 per cent to $182.4 billion.
Canada's employees also got a 9.1 per cent bump in pay in 2021.
Ukraine-Russia uncertainty
Geopolitical uncertainty could upset the apple cart, but the true effect of the war in Ukraine is still unclear.
“The fallout from the war in Ukraine will have its clearest and quickest impact on the Canadian economy through higher energy prices,” said Royce Mendes, Managing Director and Head of Macro Strategy at Desjardins.
“However, with the fighting intensifying and supply chains in Europe already being impacted, we’ll be closely monitoring for any further economic or financial spillovers to Canada.”
Statistics Canada says GDP was unchanged in December following six consecutive months of growth.
An early flash estimate points to a 0.2 per cent increase in January.
"With restrictions lightening in February and (even more so) in March, this should help counter the dampening impact of the border disruptions last month, and the hit to consumer sentiment from the conflict in Ukraine and the associated spike in gasoline prices," said BMO chief economist Doug Porter.
This is the last piece of economic data the Bank of Canada gets before its interest rate announcement on March 2. It is widely expected to raise its key benchmark rate and Porter says despite uncertainty about Ukraine, Canada's central bank has the green light to make a move.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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