L’économie canadienne s’est contractée au deuxième trimestre de 2023 | Radio-Canada.ca

The economy is exhibiting signs of slowing down. Canada's GDP contracted at an annualized rate of 0.2% in the second quarter of 2023, as per data released by Statistique Canada on Friday morning.

This slowdown is mainly due to the decrease in housing investment, a lower stock accumulation, and a slowdown in exports and household spending, said the federal agency.

For instance, there was a decline of 2.1% in housing investments during the second quarter, which marks the fifth consecutive quarterly decrease. The reduction is mainly due to a significant decrease in new constructions (-8.2%). Renovation activities have also decreased by 4.3%.

Declines that coincide with the increase in borrowing costs resulting from consecutive rate hikes by the Bank of Canada. On September 6th, the central bank will announce its benchmark interest rate. It had been raised by a quarter of a percentage point to 5% on July 12th.

The growth of real household spending has slowed down to 0.1% in the second quarter, compared to 1.2% in the previous quarter. The slight increase in goods (+0.1%) was offset by a decline in spending on new cars (-9.5%), furniture and furnishings (-3.3%), and durable goods for outdoor recreational activities (-8.3%).

Although overall household spending has slightly increased in the second quarter, per capita household spending has decreased by 0.7%, as reported by Statistics Canada. Per capita household spending has decreased in three out of the last four quarters.

Following these data, Statistics Canada has downgraded the GDP growth in May to 0.2% from its previous increase of 0.3%.

The annualized GDP growth rate for the first quarter has also been downwardly revised, dropping from 3.1% to 2.6%.

Based on Reuters and Canadian Press reports,