Canada's economy exhibited modest growth in the first quarter of 2025, expanding by 0.4% on a quarterly basis, translating to an annualized rate of approximately 1.5%.

This performance aligns closely with the Bank of Canada's earlier projections, suggesting a resilient economy despite emerging challenges.

Sectoral Performance: A Mixed Landscape

The goods-producing sector experienced a 0.6% decline in February, primarily due to contractions in mining, oil and gas, and construction industries.

Conversely, January saw a robust 0.4% GDP growth, driven by a 1.1% increase in goods-producing industries, with notable contributions from mining, quarrying, and oil and gas extraction.

The service-producing sector also faced a slight downturn of 0.1% in February, reflecting broader economic uncertainties.

External Pressures: Trade Tensions and Policy Shifts

Escalating trade tensions, particularly due to new U.S. tariffs, have introduced significant uncertainty into Canada's economic outlook.

The Bank of Canada has maintained its policy interest rate at 2.75%, citing the need to assess the full impact of these trade measures.

Additionally, recent shifts in Canada's immigration policy, aimed at reducing the number of permanent and temporary immigrants, are expected to slow GDP growth by limiting labor force expansion and consumer demand.

Outlook: Navigating Uncertainty

Looking ahead, the Bank of Canada projects economic growth to rise to around 1.8% in 2025 and 2026, outpacing potential output as excess supply is gradually absorbed.  

However, this outlook is contingent upon resolving trade tensions and managing domestic policy shifts effectively.

Economists highlight the importance of monitoring consumer spending patterns, business investment, and global economic developments to gauge the sustainability of Canada's growth trajectory.

Use the resources below to keep up with the stats.

• Bank of Canada
• Reuters
• Wall Street Journal

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