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Quebec and Ontario Economic News

Quebec: Real GDP Looks to Be Back on a Growth Path

May 28, 2024
Hélène Bégin
Principal Economist

Highlights

  • After a few months of volatility due to the healthcare and education sector strikes, Quebec’s economy is showing signs of recovery.
  • Real GDP rose 0.2% in February after spiking 2.0% in January as public sector employees returned to work following strikes that began late last year.
  • Canada’s real GDP advanced 0.2% in February as well.
  • For the second month in a row, over half of industries posted growth. According to the Institut de la statistique du Québec External link., 11 of the 20 major industries reported higher output in February. See table for more details.
  • Despite this positive news, the goods industries contracted in February, though the service industries were up again. 


Comments

Now that the public sector strikes aren’t skewing the real GDP data anymore, an underlying trend has begun to emerge. It looks like Quebec’s economy has started to pick up after contracting between Q2 2023 and the end of last year. Q1 carry-over growth (how much real GDP would grow if growth was zero following the March release) came in at 3.9%. Previous months’ prints could still be revised lower and real GDP may have dipped in March, but 2024 started off strong.

Even though the recovery seems to finally be underway, we could still see some monthly real GDP declines in the near term. Things look good overall, but many industries are still struggling, including the goods-producing industries. Many businesses are feeling the squeeze of weak product demand, high production costs and elevated interest rates, as evidenced by the growing number of business bankruptcies in Quebec.

On the services side, industries that depend on consumer spending are going through a rough patch. High interest rates and inflation have eroded purchasing power, which means households are spending less on discretionary goods and services and big-ticket items. This includes clothing and recreational goods, as well as furniture, appliances and electronics.



Implications

As projected in our latest forecast External link., Quebec's economy has begun to recover following a prolonged period of weakness last year. The economy bounced back strong in January when the strikes ended, suggesting slightly positive prints ahead. And the Desjardins Leading Index This link will open in a new window., which predicts economic recoveries in Quebec a few months out, has been on the upswing recently. All signs therefore point to Quebec's economy making a sustainable comeback in the next few months, although we could see some temporary setbacks in the near term. The economy is finally starting to recover, and that will become even more apparent in the second half of the year.


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