Live Updates > Live Update Details
2026-05-29 20:44:12
[Canada's Q1 GDP Contracts by 0.1% Annualized, Marking Second Consecutive Quarter Decline; Trade and Tariffs Drag Down Growth] ⑴ Statistics Canada data released Friday showed that the country's GDP contracted by 0.1% annualized in the first quarter, marking the second consecutive quarter of annualized decline after a 1% drop in the fourth quarter of last year. Some market observers have termed this a technical recession. ⑵ On a quarter-on-quarter basis, Q1 GDP was flat compared to the previous quarter, narrowly avoiding the definition of a technical recession at the quarterly level. Analysts and institutions had previously expected annualized growth of 1.5%. ⑶ Statistics Canada stated that the Canadian economy has largely withstood the impact of trade uncertainty and tariffs over the past year. However, the ripple effects of tariffs have weakened investment, hiring, and spending, and pushed up prices. The upcoming review of the North American Free Trade Agreement (NAFTA) and the oil price shock caused by the Middle East wars have added further uncertainty. ⑷ Q1 GDP was negatively impacted by high import levels, but this was largely offset by high inventory accumulation. Household spending, particularly on financial services and food, increased, but this was offset by declines in business and government investment. Business capital investment declined for the fifth consecutive quarter. (5) March GDP fell 0.1% month-on-month, worse than the expected flat reading. Statistics Canada's advance forecast indicated that April growth might be 0.4%, suggesting a strong start to the second quarter. The Bank of Canada had previously projected this year's growth at 1.2%, lower than last year's 1.7%, and will update its forecast in July.
