Canada's economy closed out 2014 on a solid note, but the next two years are expected to show just tame growth amid the oil slump.
The economy expanded at an annual pace of 2.4 per cent in the final three months of last year, slower than 3.2 per cent of the third quarter, Statistics Canada said Tuesday.
The report sent the Canadian dollar higher, to well above 80 cents U.S.
Most of Canadian industry boosted production in the fourth quarter, the federal statistics agency said, and consumers did their part by boosting spending, though at a slower pace. Government spending also played a role, as did an inventory buildup.
Businesses, though, did not follow suit, as investment declined.
Exports also slipped.
But the fourth-quarter report is all in the rear-window now, and doesn't account in any big way for the oil slump.
"Canadian GDP put in another decent quarter, but that's all water under the bridge since the Q4 report won't have captured the coming downdraft from weak oil prices," said chief economist Avery Shenfeld of CIBC World Markets, adding that the overall number was decent, what lay beneath it was in some ways different.
"The Q4 figures weren't quite as impressive in the details, as they were in part driven off a big climb in inventories, with final domestic demand running at a moderate 1.5 per cent (after two quarters averaging above 3 per cent)," Mr. Shenfeld said.
Not only that, but economists believe the next two years will see a slower pace of growth, something in the 2-per-cent range, as the oil crash really begins to bite.
Tuesday's report was the last piece of the puzzle heading into Wednesday's interest rate announcement by the Bank of Canada.
The central bank, which surprised markets in January with a cut to its benchmark overnight rate of one-quarter of a percentage point, had originally been expected to cut yet again on Wednesday.
That changed last week, however, when Bank of Canada Governor Stephen Poloz said the rate cut brought the "appropriate" amount of insurance as oil prices plunge.
"The rate decision, however, will be all about what's expected in 2015, rather than these results that would not have included major cuts in energy sector spending and employment," Mr. Shenfeld said.
On a more personal note, wages and salaries rose, while the household saving rate slipped, for the third quarter in a row, to 3.6 per cent. That's the lowest since early 2010.
On a monthly basis, gross domestic product grew by 0.3 per cent in December alone, marked a recovery from November's contraction, but the energy slump began to show up.
For the year as a whole, the economy expanded by 2.5 per cent.
That was then. This is now.
Indeed, many economists expect Canada's fortunes are about to change.
"The twin GDP reports are encouraging and highlight that the Canadian economy was doing pretty well even amid the initial drop in oil prices," senior economist Benjamin Reitzes of BMO Nesbitt Burns said of the quarterly and December numbers.
"However, that strength isn't expected to last, with the early 2015 data likely to soften."
Paul Ashworth, the chief North America economist at Capital Economics, put it more bluntly in a research note titled "Q4 GDP growth as good as it gets."
"As the slump in oil prices translates into a severe decline in mining investment, we expect GDP growth to be nearer 1.5 per cent annualized over the first half of this year," Mr. Ashworth said.
"The Bank of Canada expects growth to pick up in the second half of this year but, if the mining downturn is compounded by a housing slowdown, then we fear that may not happen."
In its latest forecast, Bank of Nova Scotia forecast that Canada's economy will average growth of just 1.9 per cent this year, and 2 per cent next, behind the United States, Britain and Mexico but well ahead of the laggards of the euro zone.
Canada is expected to be dragged down by the energy provinces, notably Alberta, the heart of the oil patch, which Scotiabank projected will see economic growth of 0.6 per cent this year and 1.6 per cent in 2016.