- Douglas Porter, BMO Financial Group
Canada's economy slowed the most among the Group of Seven developed countries in 2015, highlighting the effect of the commodity-price shock on the trade-reliant country and the challenges its policy makers face in supporting growth. Canada's gross domestic product increased 0.8% on annualized basis in the fourth quarter, down from the 2.4% growth rate in the July-September period, Statscan reported. The biggest drag on growth was business investment, which dropped 1.7% from the preceding three-month period and declined for the fourth straight quarter. In December, the Canadian economy grew 0.2% from the prior month, overshooting expectations for a 0.1% monthly gain amid robust gains in manufacturing and wholesale trade. In 2015, Canada's oil-battered economy expanded just 1.2%, compared with 2.5% in 2014, marking the slowest growth pace since the 2009 recession, as plunging prices for oil and other commodities reduced national income, business investment and domestic demand.
Economists are sceptical about the Canadian economy's potential this year, saying that the economy is unlikely to pick up the pace. The average analysts' estimate for GDP growth is 1.4%. Moreover, experts widely expect the Bank of Canada to hold its key rate steady at 0.5% and see little chance of a rate change this year.
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