{"id":69357,"date":"2026-01-30T16:42:15","date_gmt":"2026-01-30T16:42:15","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2026\/01\/30\/bad-news-gdp-puts-bank-of-canadas-growth-estimates-in-the-crosshairs-economists-say\/"},"modified":"2026-01-30T16:42:15","modified_gmt":"2026-01-30T16:42:15","slug":"bad-news-gdp-puts-bank-of-canadas-growth-estimates-in-the-crosshairs-economists-say","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2026\/01\/30\/bad-news-gdp-puts-bank-of-canadas-growth-estimates-in-the-crosshairs-economists-say\/","title":{"rendered":"&#039;Bad news&#039; GDP puts Bank of Canada&#039;s growth estimates in the crosshairs, economists say"},"content":{"rendered":"<div style=\"text-align:center\"><\/div><p> \n<br \/><br \/>\n<iframe loading=\"lazy\" title=\"&#039;Small but growing case&#039; for lower interest rates,\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/2sxxaS8ZIAA?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><br \/>\n<\/iframe><\/p>\n<p> The Canadian economy could struggle to meet the <\/p>\n<p>                        Bank of Canada<\/p>\n<p>                        \u2018s latest predictions for growth after <\/p>\n<p>                        gross domestic product<\/p>\n<p>                         (GDP) for November undershot estimates, say economists. <\/p>\n<p> Economic growth was <\/p>\n<p>                        flat in November<\/p>\n<p>                        , slightly undershooting estimates for GDP to rise 0.1 per cent, but better than the 0.3 per cent contraction in October. <\/p>\n<p> Statistics Canada estimates the economy expanded by 0.1 per cent in December, so the economy likely contracted by an annualized 0.5 per cent in the fourth quarter. <\/p>\n<p> The Bank of Canada, in its latest Monetary Policy Report (MPR), which came out this week alongside its <\/p>\n<p>                        interest rate decision<\/p>\n<p>                        , called for fourth-quarter GDP to come in at zero per cent. For the first quarter of 2026, the MRP forecasted a GDP rebound of 1.8 per cent. <\/p>\n<p> Here\u2019s what economists think the latest GDP data means for the economy and the Bank of Canada. <\/p>\n<h2>\u2018Still struggling\u2019: CIBC<\/h2>\n<p> \u201cThe Canadian economy was still struggling to eke out growth towards the end of the fourth quarter,\u201d Andrew Grantham, an economist at CIBC Capital Markets, said in a note. <\/p>\n<p> Even the turnaround in the retail sector was the result of the end of an industrial dispute in British Columbia that hit liquor sales, he said. <\/p>\n<p> Grantham said the difference between Statistics Canada\u2019s estimate for the fourth quarter and the Bank of Canada\u2019s could be reconciled when full numbers for the period are published at the end of February. <\/p>\n<p> \u201cThe still sluggish momentum towards quarter end may be a concern, as monthly growth rates will need to accelerate for the economy to achieve the Bank of Canada\u2019s near two per cent MPR forecast for (the first quarter),\u201d he said. <\/p>\n<p> Tariffs<\/p>\n<p>                         and trade uncertainty continue to hurt Canadian manufacturing and wholesaling sectors, he said, adding it\u2019s apparent that the economy is also struggling for momentum in other areas. <\/p>\n<p> \u201cWith underlying momentum still too weak to sustainably reduce slack within the Canadian economy, we continue to think that interest rates will need to be held in stimulative territory throughout this year and into the start of 2027,\u201d Grantham said. <\/p>\n<h2>\u2018Bad news\u2019: Capital Economics<\/h2>\n<p> \u201cThe monthly data for November is grimmer than it first appears,\u201d Alexandra Brown, North America economist at Capital Economics Ltd., said in a note. <\/p>\n<p> The manufacturing sector slumped 1.3 per cent on a 1.9 per cent contraction in the durable goods sector, following a 2.6 per cent drop in October. The sector was pulled down the most in November by month-over-month declines in transportation equipment manufacturing, machinery manufacturing and fabricated metal product manufacturing. Automotive manufacturing contracted 6.4 per cent. <\/p>\n<p> \u201cStatistics Canada attributed the weakness in manufacturing to supply chain bottlenecks, such as a global semiconductor shortage,\u201d Brown said, adding that manufacturing activity fell to levels last seen in 2011, excluding the pandemic. <\/p>\n<p> \u201cThe bad news didn\u2019t end there,\u201d she said, referring to Statistics Canada\u2019s estimate for December. <\/p>\n<p> Capital Economics is currently estimating that fourth-quarter annualized GDP will come in at minus 0.3 per cent, weaker than the Bank of Canada\u2019s flat estimate for the quarter. <\/p>\n<p> Looking ahead, \u201cthe flash estimate of only a weak monthly gain in December reduces the chance that quarterly growth will rebound sharply by 1.8 per cent annualized in the first quarter as the Bank of Canada expects,\u201d Brown said. <\/p>\n<h2>\u2018Chilly note\u2019: BMO<\/h2>\n<p> \u201cCanadian real GDP ended 2025 on a distinctly chilly note,\u201d Douglas Porter, chief economist at BMO Capital Markets, said in a note. <\/p>\n<p> Several special factors were at play in November that tilted the GDP data, Porter said, including a slowdown in vehicle production due to a shortage of chips. <\/p>\n<p> \u201cWe know that assemblies partially recovered in December,\u201d he said. <\/p>\n<p> On the plus side, an end to both the strike by Alberta\u2019s teachers and the work stoppages by Canada Post employees boosted the services side of the economy. <\/p>\n<p> Still, Porter predicts the economy contracted 0.3 per cent annualized in the final quarter of 2025 and expanded \u201ca mere\u201d 0.6 per cent year over year in 2025. <\/p>\n<p> Excluding December, the economy stagnated for five consecutive months since July, he said. <\/p>\n<p> Overall, the Canadian economy likely only grew 0.5 per cent over the past 12 months, making for a \u201csluggish handoff\u201d to 2026. <\/p>\n<p> Porter estimates the economy will likely post growth of one per cent this in 2026, close to the Bank of Canada\u2019s estimate of 1.1 per cent. <\/p>\n<p> \u201cThese results are not markedly different from the Bank of Canada\u2019s views earlier this week, but the soft undertones will keep them \u2018prepared to respond\u2019 on interest rates,\u201d he said. <\/p>\n<ul class=\"related_links\">\n<li>Canada&#8217;s economy stalls as manufacturing declines<\/li>\n<li>Why Canada&#8217;s productivity might not be as terrible as you think<\/li>\n<\/ul>\n<p> <em>\u2022 Email: gmvsuhanic@postmedia.com <\/em> <\/p>\n\n<br \/>&#039;Bad news&#039; GDP puts Bank of Canada&#039;s growth estimates in the crosshairs, economists say<\/a><br \/>\n<br \/>2026-01-30 16:42:15<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Canadian economy could struggle to meet the Bank of Canada \u2018s latest predictions for growth after gross domestic product (GDP) for November undershot estimates, say economists. Economic growth was&#8230;<\/p>\n","protected":false},"author":2,"featured_media":69358,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2026\/01\/no0130boc.jpg","fifu_image_alt":"","footnotes":""},"categories":[31],"tags":[],"class_list":["post-69357","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/69357","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=69357"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/69357\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/69358"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=69357"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=69357"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=69357"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}