Canada: Economic activity drops in February
GDP reading: GDP slid 0.2% in month-on-month seasonally adjusted terms in February, which contrasted January’s 0.4% increase. February’s figure was below market expectations. Goods-producing industries led February’s overall decline, driven by weakness in mining, oil and gas extraction plus construction, while service industries dipped slightly due to contractions in transportation and real estate. On an annual basis, monthly GDP grew 1.6% in February, which was below January’s 2.3% expansion and marked the worst result since May 2024.
GDP outlook: A flash estimate put GDP growth at 0.1% in March, taking Q1’s expansion to around 1.5% in quarter-on-quarter annualized terms. That said, economic momentum should deteriorate in Q2 due to U.S. tariffs.
Panelist insight: Desjardins’ LJ Valencia said:
“February 2025’s decline in real GDP by industry was primarily attributed to weather-induced weakness in goods-producing sectors. […] Under the hood, there are signs the economy is responding adversely to escalating trade tensions with the US. Consequently, we’re projecting a mild recession in 2025, possibly starting as early as Q2.”