Canada’s gross domestic product (GDP) grew at a better-than-expected 2.6% annualized rate during the fourth quarter of 2024.
The 2.6% growth recorded in the final months of last year was well ahead of the 1.8% annualized GDP expected among economists who were surveyed by the Reuters news agency.
Additionally, third quarter GDP growth was revised up to 2.2% from 1% earlier, and an advance estimate shows that monthly growth would likely be 0.3% in January of this year.
Statistics Canda attributed the strong result to a surge in household spending ahead of the year-end holidays, and a sales tax break that began in mid-December of last year.
The Ottawa-based statistical agency added that momentum in the Canadian economy appears to have continued in this year’s first quarter, accelerating as U.S. President Donald Trump took office and threatened import tariffs of 25% on Canadian goods.
Specifically, Statistics Canada said the economy got a boost at the end of last year from a rise in exports and business investment.
Household spending rose 1.4% in the fourth quarter, the strongest growth since the second quarter of 2022.
Purchases of new motor vehicles such as trucks and sport utility vehicles (SUVs) led the overall increase in household spending.
At the same time, residential construction grew 3.9% in the fourth quarter of 2024, the largest quarterly increase since the final months of 2021.
Growth in exports outpaced imports, following declines in the third quarter of last year. Exports of goods and services rose 1.8% in Q4 2024 after declining 0.2% in the third quarter.
The leading contributors to the higher exports were unwrought gold, silver, and platinum, as well as crude oil and passenger cars.
Imports of goods and services increased 1.3% in the fourth quarter, following a 0.3% decline in the third quarter.
On a down note, non-farm inventories accumulated at a slower pace in 2024, posting $16.40 billion compared with $28.20 billion in 2023.
Compensation of Canadian employees grew 1% in the fourth quarter, a slower pace compared with the 1.7% increase seen in the previous third quarter.
And the household savings rate in Canada declined from 7.3% in the third quarter to 6.1% in the fourth quarter as growth in disposable income lagged overall spending.
