Defying economists’ predictions of an overall decline, Canadian GDP remained flat in February despite significant weakness from long-struggling sectors dragging down the economy.
“Technically, the economy actually expanded by 0.025 per cent,” analyst Lucas Kawa wrote in a breakdown piece for Business in Canada
The number was certainly better than the projected 0.1 per cent (and at an earlier point, even pegged at 0.2 per cent) slowdown, mostly due to a strong showing from the retail sector.
“Continued cold weather meant utilities also provided a boost, while mining, oil and gas extraction retraced some of the previous month’s gains,” Kawa said.
“[These] results support that the Bank of Canada’s general diagnosis that the oil shock will have a ‘front-loaded’ negative impact on the Canadian economy,” he added.
Canada’s economy—which has suffered repeated impacts from the global oil shock—isn’t out of the woods yet, though, as the energy, manufacturing, and wholesale segments would are expected to continue being problematic throughout the year.
“Demand for oil field services companies has fallen off a cliff, and they’ve lost a ton of pricing power,” Kawa warned.