Canada's Economy Prods Along Below-Potential Growth, Says BMO

06:17 AM EST, 12/02/2025 (MT Newswires) -- Through the choppy quarters and flattering recent headline results in Canadian gross domestic product, the economy is grinding out below-potential growth, said Bank of Montreal (BMO).

Real GDP has now expanded 1.4% in the past year, through all the ups and down of the trade dispute with the United States, easing cycle and change of government, noted the bank. With trade carving into activity over that period, final domestic demand has held up better and grown a firmer 1.7%.

The Canadian household continues to provide support for final domestic demand, adding almost a full percentage point to overall real GDP growth in the past year, stated BMO. With a wave of mortgage renewals still incoming, household discretionary spending should remain contained in the year ahead, but continue to grow.

Residential investment remains very quiet with prolonged housing corrections in some major centers. But the bank has now seen activity come off the lows, given a mix of rental construction, renovations and more transaction activity.

Business investment (nonresidential, machinery & equipment and intellectual property) remains the laggard, adding precisely zero to growth in the past year. That's while the same category is adding large chunks to U.S. growth, courtesy of the Artificial Intelligence rush, pointed out BMO.

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