Canada entered a technical recession after GDP fell at an annualised 0.1% rate in the first quarter, Statistics Canada said Friday.
The decline followed a downwardly revised 1% contraction in the fourth quarter of last year. Some economists define two straight quarterly annualised declines as a technical recession.
Statistics Canada data showed business capital investment fell 0.7% in the first quarter. It marked the fifth straight quarterly decline.
The Canadian technical recession signal came as trade uncertainty and US tariff pressure weighed on investment, hiring and spending.
Tariffs have also pushed up costs for businesses and consumers. As a result, firms have faced weaker confidence while planning new investments.
The upcoming review of the North American trade agreement has added another risk for companies. The crude price shock linked to the Middle East war has also increased uncertainty.
On a monthly basis, GDP declined 0.1% in March, Statistics Canada said. Economists had expected flat growth for the month.
However, the agency’s advance estimate showed April GDP likely grew 0.4%. That points to a stronger start for the second quarter.
The last two technical recessions in Canada came during the 2020 pandemic shock and the early-2015 oil price shock.
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The Bank of Canada has said growth this year will likely reach 1.2%, down from 1.7% last year. The central bank will update its projections in July.
The GDP figures add pressure to policymakers as they balance weak growth, tariff risks and price pressures.
