Gross domestic product | Quebec wins back the losses of 2020, but…

Quebec’s economy continued to grow in the fourth quarter of 2021 as its gross domestic product (GDP) ended 2021 with a strong year-on-year growth of 6.2%, up 1.1% from the previous quarter.

Posted at 8:00 am.

Martin Vallière

Martin Vallière

The increase brings Quebec’s GDP back above the level seen at the end of 2019, offsetting the 5.5% decline recorded in 2020, according to data released Thursday by the Statistical Institute of Quebec.

“In late 2021, the Quebec economy has fully recovered from the losses suffered during the pandemic in 2020,” said Daren King, an economist at the National Bank, in a post on economic analysis.

“In December 2021, Quebec GDP was 2.2% higher than it was in February 2020, just before the pandemic. It also shows that recovery [au Québec] was larger than the country as a whole as Canada’s GDP at the end of 2021 was only 0.4% above its pre-pandemic level. »

Growth retardation

Although Quebec’s Q4 GDP growth was still strong at the end of 2021, it is nonetheless slowing compared to previous quarters.

Compared to the previous year, GDP growth in the fourth quarter of 2021 remained at 4.5% compared to the fourth quarter of 2020. And it’s the second quarter in a row, says Helen Bejen, senior economist at Desjardins Group, in a report to Economic Analysis.

“Despite strong real GDP growth in the last quarter, weakness in several components dampens results. [en termes annualisés]. Among other things, the decrease in spending on goods could not be fully offset by the growth in spending on services, which has been going on since the beginning of 2021,” notes Start off.

At the National Bank, economist Darren King notes that “in the second half of 2021, growth in Quebec was slower than in Canada as a whole.”

He notes that annual GDP growth in Quebec remained stable at 4.5% in the third and fourth quarters, compared to 5.5% in the third quarter and 6.7% in the fourth quarter for the entire Canadian economy.

Refrigeration in real estate

Economists say Quebec’s slowdown in annual GDP growth seen at the end of 2021 is due to a widening productivity gap between major sectors of the economy.

“Growth in the fourth quarter was mainly driven by inventory replenishment. [des entreprises] and the growth of international trade, while domestic demand has practically stopped,” says Daren King.

“In fact, without an increase in government spending and investment in machinery and equipment [des entreprises], domestic demand should have declined during the quarter due to lower consumption and investment in residential construction. »

At Desjardins, economist Hélène Bejen also notes that “housing investment cooled down again” in the fourth quarter, following “a downward trend that began in the second quarter” after construction peaked in early 2021.

On the positive side, Begin notes that “the growth in investment in machinery and tools [en croissance annuelle de 15,7 % ] good news for business. These efforts must continue in the face of labor shortages and rising costs of doing business.”

Quebec savings could save the day

What should we expect in the coming quarters?

According to Daren King of the National Bank, “Weak consumption [en fin d’année 2021] should be temporary and recover in 2022.”

“The rise in commodity prices is a brake, but a high savings rate [des ménages] and the full-time job market keeps us optimistic,” he says.

“Moreover, Quebec household debt, which remains lower than the rest of Canada, bodes well for a smaller payment shock in the context of higher interest rates. »

At Desjardins, Hélène Bejen predicts that “the strong growth seen at the end of 2021 should give way to a slower pace in the first half of 2022.”

Tribute to the war in Ukraine

“Even if most medical restrictions have now been lifted in Quebec, the risks [pour l’économie] moved up a notch because of the war between Russia and Ukraine, says Start off. Exports will be affected by the slowdown in the global economy, especially in Europe. Household and business confidence could be undermined, limiting their spending and investment. The outlook for the next quarter will be bleak, the economist said. “The global economic context will be less favorable by the summer, and the economy of Quebec will not escape slowdown,” she said.

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