Canada’s economy experienced a modest annualized decline in real GDP during the first quarter, falling by 0.1%, following a 1% decrease in the previous quarter. This marks the first time since 2020 that the country has seen two straight quarterly GDP contractions, meeting the textbook criteria for a technical recession.
Despite this, the overall economic picture remains nuanced. On a quarterly comparison basis, GDP showed no change from the last quarter of the previous year, which by that metric does not qualify as a recession. Key factors behind the slowdown included a significant rise in gold imports that weighed on growth, alongside continued weakness in business investment and a cooling resale housing market.
Business investment contracted for the fifth consecutive quarter, and resource extraction and construction sectors both showed softness, contributing to a slight GDP dip in March. However, early estimates indicate a potential rebound in April with 0.4% growth, driven by improvements in the mining and oil and gas sectors.
Canada’s economy has demonstrated resilience amid ongoing trade tensions with the United States, which have introduced uncertainty impacting hiring decisions and capital spending. Economists note that while the recent GDP decline is minor and potentially reversible with future data revisions, persistent challenges remain. One expert highlighted that the economy struggled to gain momentum over the past year amid these external pressures, underscoring the complexity of the current economic environment.