🇨🇦 Cable FX Macro Weekly Note: Canada Q1 GDP Growth Rate

**As seen in Risk In The Week report 05/27/23, subscribe at cablefxm.co.uk/reports

The fourth quarter saw Canadian economic output flat vs the prior 2.9% annualized rate, this was a miss from the consensus median of 1.6%. Canadian growth had not been this slow since the second quarter of 2021, output was pressured by a stall in inventories, while the 3Q quarter was revised lower to 2.3% from a 2.9%. 4Q inventories took off 5.61 percentage points off the headline after they showed a contraction of CAD29.78 billion, business investment contributed with -1.04 percentage points as it fell by 5.3%, final consumption expenditure added 1.60 percentage points as it increased by 2.1%. The most recent survey compiled by Bloomberg showed economists 1Q growth expectations at 2.5%, this was an upward revision to the prior 1.6%, the same survey sees output flat for 2023. The desk at J.P. Morgan points to relative strength developing in Canada over Q1, they say this growth resilience is shared with the North American region. Also, J.P. Morgan points to a less risky screening from Canadian regional banks when compared to the rest of the G10, Canada CRE loans as % of total loans is the lowest in the group. Economists at RBC expect Q1 figures to show a 1.4% rise in household consumption, this would be slower than the prior 2.0%. According to RBC calculations, the first quarter is set to post a sharp rise in exports at 12.3% vs the prior 0.8%, they stand in line with the consensus for a Q1 real GDP growth rate at 2.5%.