OTTAWA – The economy exceeded low expectations to grow at an annual rate of 0.8 per cent in the final three months of 2015, Statistics Canada said Tuesday.
A consensus of economists had predicted real GDP for the fourth quarter to produce a flat reading, according to Thomson Reuters.
While the latest report on real gross domestic product beat expectations, it still marked slow growth – something that Statistics Canada said was due to weakness in domestic demand, business investment and exports. These negative factors partially offset a positive boost from a decrease in imports.
The economy fell into a technical recession at the start of 2015 when it contracted over the first two quarters by a revised 0.9 per cent and again by a revised 0.4 per cent. Real GDP increased by a revised 2.4 per cent in the third quarter.
The reading was released as the federal government prepares a spring budget expected to contain billions of dollars worth of commitments – such as infrastructure spending – that it insists will help revive economic growth and create jobs. The budget date is March 22.
Last week, the Liberal government acknowledged next year’s deficit could surpass $20 billion – and some observers believe it could reach as high as $30 billion.
Statistics Canada also said Tuesday that the country’s terms of trade – a measure of export prices relative to import prices – sunk for the fifth consecutive quarter to reach its lowest level since late 2003.
Looking back at 2015, the agency found that the economy grew by 1.2 per cent – less than half of the 2.5 per cent pace for 2014. Before that, the economy grew 2.2 per cent in 2013, 1.7 per cent in 2012 and 3.1 per cent in 2011.
The report said the 2015 reading was dragged down by a contraction of 4.8 per cent in business gross fixed capital formation, a category that includes buildings, machinery and intellectual property.
Statistics Canada said the decline, the first after five consecutive years of increases, was mostly due to a 12.7 per cent drop in business investment in non-residential structures.
Meanwhile, Canada’s terms of trade shrunk by 6.9 per cent last year, which followed a 1.3 per cent decrease in 2014.
The agency also said real GDP grew at a month-to-month rate of 0.2 per cent in December, which followed monthly increases of 0.3 per cent in November and 0.1 per cent in October.