Royal Bank of Canada (RBC) economists Claire Fan and Abbey Xu anticipate that Canadian GDP will be essentially flat in January, following a 0.2% increase in December, with weakness primarily in the autos and housing sectors but offset by strength in energy and retail [1]. Early indicators, including RBC card data and Statistics Canada advances, suggest a partial rebound in February as disruptions unwind [1]. Spending resilience appears to have continued into February, supporting the outlook for a modest increase in Q1 GDP [1]. The Bank of Canada highlighted downside risks to its 1.8% annualized GDP growth forecast for Q1 during its March meeting [1]. RBC expects that improvements in activity in February and March, particularly as auto sector disruptions ease, should result in Q1 growth roughly in line with forecasts [1].
CONCLUSION
RBC economists project Canadian GDP to be flat in January but expect a partial rebound in February and March, keeping Q1 growth in line with forecasts. The Bank of Canada has flagged downside risks to its 1.8% annualized GDP growth target for Q1. Overall, market sentiment is cautiously optimistic, with resilience in spending and easing disruptions supporting a modest recovery.