Economists say gross domestic product (GDP) figures in the fourth quarter likely ticked slightly higher, but not enough to offset a per capita decline. 

In a report Friday, Nathan Janzen, assistant chief economist at RBC, and Carrie Freestone, an economist at RBC, said that the Bank of Canada will closely monitor Canada’s GDP data following January inflation data that came in less than three per cent. The economists predict fourth-quarter GDP figures to “remain in positive territory” with a slight annual gain of 0.5 per cent. 

“That will prevent the economy from seeing two consecutive quarters of contraction, which is often used as the definition of a ‘technical’ recession,” the report said. 

“But when measured against the country’s rapid population growth, it’s the sixth straight quarterly decline on a per-capita basis, alongside a rising unemployment rate.” 

Statistics Canada is scheduled to release fourth-quarter GDP figures on Feb. 29. 

The economists said consumer spending “bounced back” during the fourth quarter, as retail sales volumes rose 5.3 per cent compared to the previous year.  However, the report also noted that business spending appeared to have softened. 

Despite employment continuing to rise during that period, the report said actual hours worked fell, marking the first decline since pandemic lockdowns in 2020. 

“The bottom hasn’t fallen out of the economy in a way that would force the BoC (Bank of Canada)  to rush into easing interest rates, and inflation is slowing but still above the central bank’s two per cent target,” the report said. 

“Our base case remains that the first interest rate cut from the BoC will come in June, contingent on inflation continuing to drift lower.”