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.
Canada’s 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 annualized decline in the fourth quarter of 2025.
Two consecutive quarters of negative GDP growth is sometimes referred to as a “technical recession.” However, economists cautioned that it may be premature to use the term, as the first-quarter decline was small, and could easily be revised upwards.
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.
“While there will be plenty of debate over whether this constitutes a recession (we would say ‘no, not really’), there is little debate that the economy has struggled to make any headway over the past year amid the ongoing trade conflict,” Douglas Porter, chief economist at the Bank of Montreal, wrote in a note to clients.
On a per capita basis, GDP rose 0.2 per cent compared to the previous quarter, as the population declined for the second consecutive quarter on the heels of more restrictive immigration policy.
Statscan’s advanced estimate of 0.4 per cent quarterly growth in April suggests the economy began to pick-up steam at the start of the second quarter.