The economy exceeded low expectations to grow at an annual rate of 0.8% in the final three months of 2015, Statistics Canada said Tuesday.
A consensus of economists had predicted real GDP for the fourth quarter to produce a flat reading, according to Thomson Reuters.
While the latest report on real gross domestic product beat expectations, it still marked slow growth –something that Statistics Canada said was due to weakness in domestic demand, business investment and exports. These negative factors partially offset a positive boost from a decrease in imports.
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The economy fell into a technical recession at the start of 2015 when it contracted over the first two quarters by a revised 0.9% and again by a revised 0.4%. Real GDP increased by a revised 2.4% in the third quarter.
The reading was released as the federal government prepares a spring budget expected to contain billions of dollars worth of commitments – such as infrastructure spending – that it insists will help revive economic growth and create jobs. The budget date is March 22.
Last week, the Liberal government acknowledged next year’s deficit could surpass $20 billion – and some observers believe it could reach as high as $30 billion.
Statistics Canada also said Tuesday that the country’s terms of trade – a measure of export prices relative to import prices – sunk for the fifth consecutive quarter to reach its lowest level since late 2003.
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Looking back at 2015, the agency found that the economy grew by 1.2% – less than half of the 2.5% pace for 2014. Before that, the economy grew 2.2% in 2013, 1.7% in 2012 and 3.1% in 2011.
The report said the 2015 reading was dragged down by a contraction of 4.8% in business gross fixed capital formation, a category that includes buildings, machinery and intellectual property.
Statistics Canada said the decline, the first after five consecutive years of increases, was mostly due to a 12.7% drop in business investment in non-residential structures.
Meanwhile, Canada’s terms of trade shrunk by 6.9% last year, which followed a 1.3% decrease in 2014.
The agency also said real GDP grew at a month-to-month rate of 0.2% in December, which followed monthly increases of 0.3% in November and 0.1% in October.
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