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By some measures, Canada’s economy is falling behind the U.S. Here’s what that means.
Driving the news: While our American neighbours watch their economy grow, Canada is continuing to grapple with challenges in maintaining its economic stability. Consumers are pulling back on their spending, a phenomenon that has been driven by a variety of factors:
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Canada’s GDP growth is at a standstill, while the U.S. is reporting substantial growth, with the latest figures displaying an impressive 4.9% surge seen last quarter.
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The pinch of rising interest rates is being distinctly felt in Canada, amplified by the weight of household debt and the intricacies of our highly rate-sensitive mortgage system.
- Canada’s lack of productivity remains a cause for concern, hampering our ability to compete globally. Delays in implementing industrial policies are adding fuel to the fire.
Why it matters: Given the current economic landscape, there's growing speculation that the Bank of Canada could take preemptive measures to stimulate productivity and ease our debt burdens. That could mean deciding to lower interest rates before the U.S. does the same.
Bottom line: We recommend keeping a watchful eye on the Bank of Canada over the coming months, especially as its policies begin to diverge from those of the U.S.—KM