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In February 2025, Canada's economy contracted by 0.2%, marking its first monthly decline since November 2024. This downturn was primarily driven by reductions in the mining, quarrying, oil and gas extraction, and transportation and warehousing sectors. The goods-producing industries experienced a 0.6% decrease, while the service-producing industries saw a slight 0.1% decline. Despite this setback, preliminary estimates suggest a modest 0.1% growth in March, with the economy projected to have expanded by 1.5% on an annualized basis in the first quarter .

Analysts had anticipated that February's GDP would remain flat, following a 0.4% growth in January. The unexpected contraction has led financial markets to increase the likelihood of a rate cut by the Bank of Canada in June to slightly above 50%. The downturn in February was partly attributed to adverse weather conditions, including heavy snowstorms, which affected various sectors. Additionally, the impact of U.S. tariffs on key sectors like steel and automotive is beginning to influence economic performance, with manufacturing showing a temporary boost due to preemptive purchasing in response to ongoing trade tensions .

Looking ahead, the Bank of Canada anticipates modest economic growth of 0.1% in March, with a projected annualized GDP increase of 1.5% for the first quarter. However, the ongoing trade uncertainties, particularly concerning U.S. tariffs, pose risks to the economic outlook. Analysts suggest that the central bank may resume its rate-cutting cycle in response to these challenges, aiming to support economic momentum amid external pressures .

Read the full article on: CBC