Economists forecast that Canadian gross domestic product (GDP) per capita is likely to have shrunk in the first quarter, potentially marking a seventh consecutive decline.
RBC Assistant Chief Economist Nathan Janzen and Economist Abbey Xu said in a report Friday that the Canadian economy likely grew “more quickly” in the first quarter, but not enough to keep pace with “surging population growth.” The economists said this is likely to mean that on a per-person basis, GDP fell during the quarter for the seventh consecutive time.
“We look for an annualized 2.5 per cent increase in Q1 (first quarter) GDP from the previous quarter, up from one per cent in Q4 (fourth quarter) 2023. But, with the population still growing rapidly, output per-capita will be down around one per cent (annualized q-o-q rate),” the report said.
The economists said that the estimate for April output should be slightly higher due to a 0.8 per cent increase in hours worked in previously-reported market data.
“Still, the economic backdrop in Canada has continued to soften on a per-capita basis with unemployment drifting higher and wage pressures and inflation showing further signs of easing,” the report said.
The report said consumer spending is tracking at an annualized 1.1 per cent rise in the first quarter compared to the previous quarter, as business investment appears to have increased slightly.
“But higher spending came in part from higher imports rather than domestic Canadian production with net trade on track to subtract slightly from Q1 (first quarter) GDP growth,” the report said.