Statistics Canada said Friday that gross domestic product edged up 0.2% in the fourth quarter of 2012, the same pace as the July-to-September period. On an annualized basis, the economy grew by 0.6% in the fourth quarter, compared with 0.1% in the United States, which annualizes all of its quarterly growth numbers.
Canada’s fourth-quarter annualized growth was the weakest since a 0.8% decline in the second quarter of 2011, which was heavily impacted by the tsunami in Japan. Meanwhile, third-quarter annualized growth was 0.7%, which was down from 1.9% in the second quarter and 1.2% in the first three month of 2012.
Together, those two quarters reflected the poorest economic performance for Canada since the 2008-09 recession.
So 0.6% on an annualized basis which was worse than the 0.7% of the previous quarter. That's not going to be good for government revenues. Considering Canada's population growth is around 1.2% on an annualized basis, that means for two quarters, GDP per capita has dropped slightly. It will be a while before Ontario's numbers for the fourth quarter are out, however considering Ontario's GDP growth was 0.1% (non-annualized) in the third quarter and thus underperformed the Canadian economy as a whole in the third quarter (0.2%) it is likely that Ontario was probably around 0.1% again (non-annualized).
The 2013 first quarter numbers aren't looking particularly good and with high gas prices back in Ontario in February, that doesn't bode well for consumer spending. If the first quarter numbers are similar to the third and fourth quarter numbers, that will be three quarters of weak growth for Ontario and can't be good news for the Ontario budget for the 2012-2013 fiscal year. Expect more government freezes in Ontario, including when the teachers' contracts are up in August 2014. That won't be pretty.
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