Ottawa – Official data released on Friday showed that Canada's GDP grew by 2.6% year-on-year in the fourth quarter of 2024, surpassing analysts' expectations of 1.8% growth. These results were driven by increased consumer spending, business investments, and exports, reflecting stronger-than-expected performance of the Canadian economy amidst global economic challenges.

Economic performance exceeds expectations

According to Statistics Canada, the growth rate for the third quarter has been revised upward to 2.2%, compared to the previous estimate of 1%. The Canadian economy also recorded a monthly growth of 0.2% in December, recovering from the decline seen in November.

The Bank of Canada's forecasts released last month had indicated a GDP growth of 1.8%, which was in line with estimates from analysts surveyed by Reuters, but the actual figures came in higher than these estimates, which may have implications for the central bank's upcoming monetary policy.

Economic implications and Bank of Canada strategy

This strong growth comes at a time when the Bank of Canada continues to monitor inflation and make decisions regarding interest rates. With the economy performing stronger than expected, this may lead the central bank to reassess its strategy concerning easing or tightening its monetary policy in the coming months.

Factors such as labor market trends, inflation, and fiscal policies are expected to remain at the forefront of decision-makers' priorities as Canada prepares to face economic challenges associated with slowing global growth and changes in energy markets and international trade.