{"id":703126,"date":"2026-05-29T23:04:12","date_gmt":"2026-05-29T23:04:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/703126\/"},"modified":"2026-05-29T23:04:12","modified_gmt":"2026-05-29T23:04:12","slug":"canadas-economy-stalls-posting-consecutive-quarterly-declines","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/703126\/","title":{"rendered":"Canada\u2019s economy stalls, posting consecutive quarterly declines"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Employees work at a Glencore-owned copper refinery in Montreal, in 2025.ANDREJ IVANOV\/AFP\/Getty Images<\/p>\n

The Canadian economy stalled in the first quarter of the year, posting a small annualized decline in gross domestic product as the country struggles to grow in the face of trade tensions with the United States. <\/p>\n

Canada\u2019s real GDP contracted 0.1 per cent on an annualized basis between January and March, Statistics Canada reported Friday. This was much weaker than the 1.5-per-cent growth predicted by economists at the Bank of Canada and on Bay Street, and follows a 1-per-cent decline<\/a> in the fourth quarter of 2025. <\/p>\n

Two consecutive quarters of negative GDP growth is sometimes referred to as a \u201ctechnical recession.\u201d However, economists cautioned that it may be premature to use the term, as the first-quarter decline was small, and could easily be revised upward.<\/p>\n

The last time the country saw back-to-back quarterly declines in GDP was at the outset of the COVID-19 pandemic in 2020. The Canadian economy has now contracted in three of the past four quarters.<\/p>\n<\/p>\n

\u201cWhile there will be plenty of debate over whether this constitutes a recession (we would say \u2018no, not really\u2019), there is little debate that the economy has struggled to make any headway over the past year amid the ongoing trade conflict,\u201d Douglas Porter, chief economist at the Bank of Montreal, wrote in a note to clients. <\/p>\n

On a per capita basis, GDP rose 0.2 per cent compared with the previous quarter, as the population declined for the second consecutive quarter on the heels of more restrictive immigration policy. <\/p>\n

Statscan\u2019s separate monthly GDP report, published Friday, showed a 0.1 per cent month-to-month decline in March. An advanced estimate for April showed 0.4-per-cent growth, suggesting the economy began to pick up steam at the start of the second quarter.<\/p>\n

The weak first-quarter number likely reinforces the case for the Bank of Canada to remain on hold in the coming months. The central bank has kept its policy rate at 2.25 per cent for four consecutive decisions. Recently, it has had to balance upside risks to inflation from the global oil price shock with downside risks to inflation stemming from slack in the Canadian economy. <\/p>\n

\u201cOverall, this should really throw a wet blanket on rate-hike talk, as the economy is in no condition to deal with higher rates,\u201d Mr. Porter wrote. <\/p>\n

Financial markets have pulled back on their expectations for multiple rate hikes from the Bank of Canada this year, but still see one quarter-point hike, in December, according to Bloomberg data. <\/p>\n

Geopolitical, trade risks pose rising threat to financial stability, Bank of Canada warns<\/a><\/p>\n

The first quarter GDP contraction was led by a combination of weak investment and a jump in imports, which are subtracted from the GDP tally. <\/p>\n

Government capital investment fell 2.5 per cent quarter-to-quarter, as Ottawa slowed its pace of spending on new weapons systems. <\/p>\n

Business capital investment fell 0.7 per cent \u2013 the fifth consecutive quarterly decline \u2013 with higher spending on machinery and equipment and mineral exploration offset by a decline in spending on engineering structures.<\/p>\n

\u201cBusiness investment continues to be the Achilles\u2019 heel of the Canadian economy,\u201d Marc Desormeaux, economist and vice-president of policy at the Business Council of Canada, said in an interview. <\/p>\n

\u201cThe big thing is uncertainty \u2013 uncertainty around trade policy, uncertainty around geopolitical developments,\u201d he said, pointing to the upcoming review of the United States-Mexico-Canada trade agreement. <\/p>\n

Meanwhile, the soggy housing market continued to be a drag, with resale housing activity down 9.9 per cent in the first quarter, following a 3.4-per-cent decline in 2025 overall. <\/p>\n

A big jump in imports compared with exports also dragged down the GDP calculation in the first quarter. Imports were up 2.9 per cent, driven by imports of gold, passenger cars and industrial machinery and equipment. By contrast, exports were down 0.1 per cent in the quarter, with fewer shipments of cars and trucks heading to the U.S. because of tariffs. <\/p>\n

Consumer spending grew 0.4 per cent in the quarter, following a 0.7-per-cent increase in the fourth quarter of 2025. Increases in spending on financial services and food were offset by lower spending on vehicles. <\/p>\n

\u201cOverall this was a very weak report from most angles that shows that trade uncertainty and tariffs are continuing to hold back growth, while consumers have little ammunition left for spending ahead, and interest-sensitive sectors are lagging,\u201d Katherine Judge, senior economist with Canadian Imperial Bank of Commerce economist, wrote in a note to clients. <\/p>\n

\u201cOur base case also assumes progress towards reducing some tariffs (namely aluminum and possibly steel) in the coming months, and if the oil price shock starts to fade over that period as well, GDP will return to sustainable growth for the rest of the year,\u201d she wrote.<\/p>\n

Conservative MPs pounced on the report Friday to criticize the Liberal government\u2019s economic record, leaning into the notion that the country is in a \u201ctechnical recession.\u201d <\/p>\n

Mark Carney \u201chas been Prime Minister for four quarters now. The economy has shrunk in three of those quarters,\u201d Conservative Leader Pierre Poilievre told reporters. <\/p>\n

Finance Minister Fran\u00e7ois-Philippe Champagne defended the government\u2019s record in Friday\u2019s Question Period, saying \u201cCanadians understand that the world is facing some headwinds.\u201d<\/p>\n

With a report from Bill Curry<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Employees work at a Glencore-owned copper refinery in Montreal, in 2025.ANDREJ IVANOV\/AFP\/Getty Images…\n","protected":false},"author":2,"featured_media":703127,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164,4657],"class_list":["post-703126","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy","tag-nodelphi"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/703126","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=703126"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/703126\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/703127"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=703126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=703126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=703126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}