StatCan: Canadian economy grew 4.6% in 2021

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Household mortgage debt increased by an unprecedented $182.4 billion last year, Statistics Canada said, bringing the total amount of residential mortgages countrywide to $1.93 trillion in December.

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Output was flat at the end of 2021 as Statistics Canada said real gross domestic product was essentially unchanged in December. That left the Canadian economy 0.4 per cent above pre-pandemic levels recorded in February 2020.

The agency also said in an early estimate that the Canadian economy grew by 0.2 per cent in January.

The January figure came as a bit of surprise for economists who expected a pullback in the month amid the Omicron wave that led to a loss of 200,000 jobs in the month.

Royce Mendes, managing director and head of macro strategy at Desjardins, said the economy likely built on that momentum in February as the country turned a corner on the latest wave of the pandemic, which allowed for businesses to reopen across the country.

The figures come a day before the Bank of Canada’s next scheduled interest rate announcement. The central bank is widely expected to raise its key policy rate on Wednesday in the first of what is expected to be several hikes higher this year.

They also landed the same day as parliamentary budget officer Yves Giroux released his updated outlook on the Canadian economy and federal finances.

Giroux’s report released Tuesday said the economy, after a weak start to 2022, should grow 3.9 per cent this year, driven by a sharp rebound starting in the second quarter.

He also foresees a budget deficit this fiscal year of $139.8 billion, and $47.9 billion in the next fiscal year which starts in April — both figures being better than the government projected in its financial update in December.

But Giroux warns that rosier financial picture for federal books, aided by a better-than-expected economy, could easily sour.

Giroux said outstanding Liberal election promises amount to $48.5 billion in new spending. If much of that shows up in this year’s budget, Giroux says debt and deficits would rise.

This report by The Canadian Press was first published Mar. 1, 2022.