The Canadian economy remained stable in August and a preliminary estimate from Statistics Canada suggests it declined in the third quarter.
The federal agency released its August gross domestic product (GDP) report on Tuesday, which found that rising interest rates, inflation, wildfires and drought continue to weigh on the economy. ‘economy.
August marked the second consecutive month where growth remained stable, and an initial estimate suggests the economy continued this trend in September.
For the third quarter, Statistics Canada’s preliminary estimate suggested the economy contracted at an annualized rate of 0.1%, which would follow a contraction in the second quarter.
The report indicates that 8 out of 20 industries grew in August, while growth in service-producing sectors was offset by growth in manufactured goods sectors.
Mining and hydrocarbons on the rise
Industries that have seen growth include wholesale trade and mining, quarrying, and oil and gas extraction.
Sectors like agriculture and forestry, manufacturing and retail saw declines, as did accommodation and food services.
High interest rates are expected to continue to dampen economic growth, especially as more households prepare to renew their mortgages at higher rates.
According to a recent forecast from the Bank of Canada, economic growth will remain weak for the rest of the year and until 2024.
The central bank’s key interest rate is set at 5%, its highest level since 2001.
The decline in spending caused by rising borrowing costs is expected to help curb high inflation, which stood at 3.8% in September.
The Bank of Canada expects annual inflation to return to the 2% target in 2025.