Statistics Canada’s latest GDP data confirms the Canadian economy continued to grow in the final quarter of 2024, expanding by 0.6%. The growth was driven largely by higher household spending, increased exports, and stronger business investment.

On an annualized basis, Q4 GDP rose 2.6%, exceeding economists’ expectations by nearly a full percentage point. On a per capita basis, Canada’s real GDP—adjusted to exclude growth from population increases—rose 0.2% in Q4, following a 0.1% decline in the previous quarter.

StatCan’s GDP report for December 2024 showed the economy grew by 0.2%, partially reversing November’s decline, though the increase came in slightly below economists’ expectations.

In the background, StatCan revised its GDP data for both Q2 and Q3 2024 significantly higher. Q2 growth was adjusted to 2.8% from 2.2%, while Q3 was revised to 2.2% from 1.0%.

“The Canadian economy had good momentum through the back half of 2024, as aggressive Bank of Canada rate cuts helped juice activity,” noted BMO’s Benjamin Reitzes. “Unfortunately, most of this was largely before tariff threats really ramped up.”

Markets split on March rate cut as tariff concerns take centre stage

While strong GDP growth to end 2024 would typically support a pause in rate cuts, some economists argue that last year’s data is unlikely to sway the Bank of Canada’s decision.

“Today’s GDP release isn’t going to sway the BoC. Yes, the report was strong, but Governor Macklem is more concerned about the risks on the horizon rather than what happened last year,” says TD‘s James Orlando. “The bank’s own research shows huge downside risks to the economy should tariffs come to pass.”

Orlando added that market odds for the next BoC rate decision is basically a coin toss.

“No one would complain if the BoC took out more insurance against the downside risks with another 25 bp cut, while a hold could also be justified should the bank prefer to take a wait-and-see approach,” he said.

However, RBC’s Nathan Janzen and Carrie Freestone argue that the strength of Q4 2024 growth alone is enough to justify a rate pause, even without factoring in potential tariffs from the U.S.

“We expect the signs of life in the household sector and upside inflation surprises in recent months will be enough for the BoC to stand pat on interest rates in March for the first time since June 2024,” they wrote. “The potential for significant tariff hikes remain a downside risk to economic growth and the interest rate outlook, but absent a trade shock, economic data is suggesting Canada’s economy may be faring better than initially feared.”

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Last modified: March 3, 2025