Investment Executive | Economic growth slows to a crawl in Q3
Canada’s economy has hit stall speed with few areas of strong support, setting back any talk of interest rates hikes in the new year and likely restarting calls for more government action.
The economy slumped to 0.6% in the third quarter — below even the gloomy 0.8 consensus and about one third what the Bank of Canada had predicted as recently as the summer — as trouble loomed on the export side, housing and business investment.
In addition, Statistics Canada revised downward the second quarter one notch to 1.7% and September, the final month of the third quarter, was flat, meaning the handoff to the current fourth quarter was weak.
Opposition MPs blasted the government’s economic management in the Commons on Friday, but speaking in Victoria, Finance Minister Jim Flaherty said he remains opposed to any big spending.
That doesn’t mean he isn’t open to redirecting funds toward measures that promote economic growth, he added.
“It’s not as if I don’t expect to hear good ideas, I do,” Flaherty said of the pre-budget meetings he’s holding across the country.
“It’s not as if there won’t be new initiatives and reallocating of resources. What there won’t be is any large, multi-billion dollar spending initiatives which would create a structural deficit for the government of Canada.”
Economists said Flaherty likely won’t veer off course sharply unless Canada falls back into recession. That is dependent not on domestic factors, but on whether the U.S. avoids its fiscal reckoning in January, and Europe manages to keep the debt wolf at bay.