The Statistical Institute of Quebec (ISQ) published figures last week confirming the continued slowdown in Quebec’s economic activity. From one month to another, the gross domestic product (GDP) even stood still (0.0%) in February, once the effect of inflation was taken into account, whereas the month before , real monthly GDP growth was only slightly less sluggish (0.1%).
In both cases, this marked a sharp decline in growth over 12 months. Above 3% at this time last year, after the roller coaster ride inflicted by the COVID-19 pandemic, this growth rate was still above 2.5% at the end of 2022, but has fallen 1.4% in January and 1.3% in February.
These overall figures hide significant differences between the goods production sector (-2.1% over 12 months in February) and the services sector (+2.5%), reports the ISQ. The gaps are even greater between sub-sectors, such as mining (-2.3%), construction (-1.2%), retail trade (+3.2%), professional, scientific and technical services (+4.9%) and accommodation and catering (+33%).
“The lack of vigor of the Quebec economy at the start of 2022 is in line with our forecasts,” observed Hélène Bégin, senior economist at Desjardins Group, last Wednesday. This is the first step before real GDP begins a period of contraction. Our scenario still calls for a moderate recession in 2023 and this should materialize shortly. The high level of interest rates which affects both households and businesses as well as the downward adjustment of inventories will inevitably drag the economy down. »
National Bank Financial believes, for its part, “that a recession is still avoidable in Quebec”, explained its colleague Daren King, the same day. “In fact, the financial situation of Quebec consumers compares favorably to the rest of the [Canada] with a savings rate that remains even higher and a lower level of indebtedness, all the trappings in the face of current challenges. »