Canada’s Economy Rebounds, Outlook Highly Uncertain

Data released on Thursday showed GDP rose in Canada 0.8% in October and the Canadian economy is expected to grow at a 6.5% rate during the fourth quarter.

GDP in Canada rose 0.8% in October as supply chain disruptions eased, at least temporarily. Motor vehicle and parts manufacturing jumped 19% after falling sharply in September, but was still almost a quarter below levels in October a year ago with the global chip shortage restraining output.

Preliminary estimate that output grew another 0.3% in November, despite significant disruptions from flooding.

The impact of the new Omicron variant on the economic outlook remains highly uncertain. The re-imposition of some restrictions to hospitality and travel industries will limit growth in the near-term. And health-related concerns might dampen services demand.

But how long these restrictions last and how stringent they become are difficult to predict. Still, high rates of vaccination, extended government benefits and accelerated booster rollouts are all expected to help curb the threat.

Economists continue to expect downward but at this time limited impact to our Q4 GDP growth tracking of 6.5%.