Canada's economy was growing at 6.7% pace at the end of 2021
By end of fourth quarter, economy was finally bigger than it was before the pandemic
The Canadian economy mostly started 2022 on strong footing, despite the impact of the Omicron coronavirus variant and protests that shut down key border crossings, as fourth quarter growth came in above expectations, official data showed on Tuesday.
Canada's economy grew 6.7 per cent in the fourth quarter on an annualized basis, beating analyst expectations of 6.5 per cent, while January GDP most likely rose 0.2 per cent after stagnating in December, Statistics Canada data showed.
With January's gain, which is a preliminary estimate, economic activity is now 0.6 per cent above pre-pandemic levels, the agency said.
"While the clouds darkened a bit before the end of the year ... GDP posted a surprising 0.2 per cent advance in January despite the Omicron wave and all of the associated job losses," said Royce Mendes, head of macro strategies at Desjardins Group.
"The economy likely built on that momentum in February, as the latest COVID wave turned a corner, which allowed for more reopenings across the country."
The strong fourth quarter print came in above the Bank of Canada's own January forecast of a fourth quarter gain of 5.8 per cent. The central bank is broadly expected to raise its key interest rate to 0.50 per cent when its meets on Wednesday.
"I don't think the year-end numbers change the picture much for the bank other than to drive home the point that the economy was still managing to grind ahead even in the face of Omicron," said Doug Porter, chief economist at BMO Capital Markets.
The Canadian dollar was trading 0.1 per cent higher at 78.96 U.S. cents.