The Quebec economy shrank by 1.9% in the second quarter, a more pronounced decline than the Canadian average of -0.2%.

This abrupt fall is not a surprise since it was preceded by several signs of weakness, commented Desjardins economist Hélène Bégin. “Although it is still early to say, this could be the start of a period of economic contraction which is likely to last until early 2024, according to our scenario,” he said. -she advanced.

The Quebec economy has done well until now, with GDP growth of 1.9% in the last quarter of 2022 and an advance of 1.4% in the first quarter of the current year.

Inflation and rising interest rates are starting to have an impact on household spending. Consumer spending has decreased for the first time since the start of the pandemic, underlines Daren King, economist at the National Bank. “The annualized decline amounts to 2% for the total, a drop of 2.8% for services and 1.1% for goods.

For durable goods, often purchased on credit, the decline reached 7.5% in the second quarter.

Residential investment is down, as is business investment. A jump in exports of 10.9% and a drop in imports of 5.1% limited the decline of the Quebec economy in the second quarter.

The household savings rate increased from 6.8% in the first quarter to 8.2% in the second quarter. This cushion, as well as a debt less heavy than the Canadian average, places Quebec in an enviable position, according to the National Bank, which does not foresee a recession, but “growth which will oscillate around the neutral point” over the course of the next months.