Signs of weak demand in Canada

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Canada’s economic growth data are more weaker than expected and lack of positive trends. The monthly gross domestic product shows that following the economic contraction in the third quarter, the economic rebound in the fourth quarter was weak.

While supply constraints, including the recent U.S. auto strike and St. Lawrence Seaway strike, continue to disrupt economic activity, there are also signals of softening domestic demand in Canada.

This softening will allow inflation to ease more sustainably next year, and we still think the Bank of Canada will cut interest rates for the first time in the second quarter of 2024.