Canadian economy grew at a modest pace in Q4, but cracks are starting to show: TD Economics

Quotes from TD Economics:

- Canada's real GDP grew by 2.4% annualized in Q4, decelerating from the 3.2% pace in Q3. While the real GDP growth print for Q4 was solid, the numbers underlying the release point to stormy seas ahead. Indeed, without inventories expanding in Q4, real GDP growth would have barely stayed in the black, pointing to more weakness than the headline growth number would suggest.

- On a trend basis, weakness in the Canadian economy is already becoming apparent. After reaching a recent high of 3.8% in Q2 of 2014, real GDP growth has decelerated in each subsequent quarter. This is a trend that we expect to see continue into 2015, with growth in Q1 of 2015 expected to be in the 1% to 2% range.

- As Q4 real GDP growth came in very close to the Bank of Canada's projection in its January 2015 MPR, and with growth forecast to be around the Bank's 1.5% projection in the first half of 2015, we expect that Governor Poloz will keep interest rates on hold at tomorrow's fixed announcement date.