OTTAWA- The Canadian economy mostly likely started 2022 on strong footing, despite the impact of the Omicron variant and protests that shut down key border crossings, while fourth quarter growth came in above expectations, official data showed on Tuesday.
Canada's economy grew 6.7% in the fourth quarter on an annualized basis, beating analyst expectations of 6.5%, while January GDP most likely rose 0.2% after stagnating in December, Statistics Canada data showed.
With January's gain, which is a preliminary estimate, economic activity is now 0.6% above pre-pandemic levels, Statscan said.
"While the clouds darkened a bit before the end of the year ... GDP posted a surprising 0.2% advance in January despite the Omicron wave and all of the associated job losses," said Royce Mendes, head of macro strategies at Desjardins Group.
"The economy likely built on that momentum in February, as the latest COVID wave turned a corner which allowed for more reopenings across the country," he added.
The strong fourth quarter print came in above the Bank of Canada's own January forecast of a fourth quarter gain of 5.8%. The central bank is broadly expected to raise its key interest rate to 0.50% when its meets on Wednesday.
"I don't think the year-end numbers change the picture much for the Bank other than to drive home the point that the economy was still managing to grind ahead even in the face of Omicron," said Doug Porter, chief economist at BMO Capital Markets.
The Canadian dollar was trading 0.1% higher at 1.2665 to the greenback, or 78.96 U.S. cents. (Reporting by Julie Gordon in Ottawa and Ismail Shakil in Bengaluru and additional reporting by Fergal Smith in Toronto; Editing by Edmund Blair, Andrea Ricci and Jonathan Oatis)