The Quebec economy continues to perform better than that of the rest of Canada.
Quebec’s real gross domestic product (GDP) grew at an annualized rate of 2.7% in the second quarter, the Institut de la statistique du Québec reported Wednesday. That was slower than the 3.6% jump seen in the first three months of the year, but continued a nice rebound after three consecutive negative quarters at the end of 2023.
It was also, once again, faster than the Canadian economy as a whole, which expanded by 1.8% in the first quarter of 2024 and 2.1% in the second quarter.
This strong performance of the Quebec economy is notably a reflection of the increase in household spending (+2.1% from the first half of 2023 to the first half of 2024) and public administrations (+1%). This is the fourth consecutive quarterly increase in household consumption spending. Quebec’s economic performance is also due to a stronger increase in exports (+2.3%) than in imports (+1.6%), which improved the foreign trade balance.
Business investment decreased (-1.5%), but this decline was mainly observed in buildings and structures, with their efforts increasing in machinery and equipment.
This news is also “welcome given the productivity issues,” observed Alexandra Ducharme, economist at the National Bank, in a brief analysis on Wednesday.
The Quebec economy should thus be able to continue to count on the strength of its consumers and a certain return of its businesses to continue its growth in the coming quarters, “although in a more moderate way” and at a pace this time lower than that of the rest of Canada, estimate the economists at Mouvement Desjardins, Hélène Bégin and Maëlle Boulais-Préseault. “Despite certain geopolitical uncertainties that persist at the global level, the Quebec economy is based on solid foundations that should allow it to stay the course.”
Households and businesses will, however, continue to face headwinds in the second half of the year, warns Alexandra Ducharme. Starting with the Bank of Canada’s interest rates, which, despite three recent consecutive cuts of 0.25 percentage points each, continue to weigh on their consumption and investments.
The National Bank economist also points out that, like the Canadian economy, the most recent monthly figures show growth that has almost fallen to neutral in Quebec.
And the picture is even less bright when we take into account the strong increase in the population in recent years, she continues, with growth in GDP per capita being negative in Canada since mid-2022, and barely positive in Quebec since the start of the year.