The Quebec economy is treading water. After increasing by only 0.1% in January, the Gross Domestic Product remained at a neutral point in February, according to the Institut de la statistique du Québec.
This stability is explained by a general weakness of the economy, underlines the economist of the National Bank Daren King. About 40% of subsectors in the economy were down in February, compared to 25% in January, he said.
The Quebec economy is currently growing at an annual rate of 1.1%, compared to 2.5% for Canada as a whole.
The National Bank economist believes that Quebec can avoid recession because households have more savings and are less indebted than elsewhere in Canada. At Desjardins, the tone is less optimistic. “This is the first step before real GDP begins a period of contraction,” commented Hélène Bégin, senior economist at Desjardins.
“Our scenario is still calling for a moderate recession in 2023 and this should appear shortly, according to Desjardins. 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”.