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Statistics Canada releases GDP flash estimate for February exhibiting progress flatlined
Revealed Mar 28, 2025 • Final up to date 1 day in the past • 3 minute learn
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January was the primary time GDP per capita rose over two straight months in two-and-a-half years. Beforehand, it contracted over a number of quarters because the economic system did not maintain tempo with the rise in inhabitants. Picture by Justin Tang/The Canadian Press/Postmedia information
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Canada’s economic system expanded by 0.4 per cent in January from the month earlier than, beating analysts’ estimates and setting the stage for quarterly annualized progress to hit the Financial institution of Canada’s goal of two per cent.
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However Statistics Canada‘s flash gross home product (GDP) estimate for February is flat, a potential signal of issues to come back as United States President Donald Trump’s commerce warfare continues to dent shopper and enterprise confidence.
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Right here’s what economists are saying in regards to the newest GDP numbers and what they imply for the Financial institution of Canada and rates of interest.
Balancing act: Alberta Central
The Canadian economic system entered the brand new yr on a “sturdy footing,” however that doesn’t actually matter now, Charles St-Arnaud, chief economist at credit score union Alberta Central, mentioned.
“General, the energy within the economic system firstly of the yr doesn’t alter the Financial institution of Canada’s view that it might want to stability the deflationary affect of the tariffs in opposition to the inflationary pressures arising from larger prices ensuing from the tariffs,” he mentioned in a notice on Friday.
For the second, he’s anticipating policymakers to carry rates of interest at their subsequent coverage assembly on April 16 until one thing materially modifications on the tariff entrance.
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Primarily based on the “excessive uncertainty” created by Trump’s tariff gyrations in February and March, St-Arnaud thinks the economic system is headed for contraction within the second quarter.
‘Synthetic increase’: Oxford Economics
January’s sturdy GDP consequence was the results of an “synthetic increase,” with corporations pushing extra exports to the U.S. to beat tariffs and the GST/HST tax break supporting demand, Michael Davenport, senior economist at Oxford Economics Canada.
He mentioned it’s solely downhill from right here for progress.
“January might symbolize the height in financial exercise because the U.S.-Canada commerce warfare pushes Canada’s economic system right into a recession starting in Q2,” Davenport mentioned in a notice.
He doesn’t suppose the Financial institution of Canada will put an excessive amount of inventory within the backward-looking GDP information, and he mentioned policymakers will doubtless maintain rates of interest on the subsequent assembly “to stability the adverse hit to demand from tariffs in opposition to the upside dangers to inflation.”
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‘Dropping momentum’: Capital Economics
The poor flash GDP estimate for February can’t be totally laid on the door of Trump’s tariff menace, Thomas Ryan, North America economist at Capital Economics Ltd., mentioned.
“Nonetheless, it provides to the sense the economic system is dropping momentum,” he mentioned in a notice.
Slumping enterprise and shopper confidence additionally look like front-running the rising nervousness relating to tariffs and the hurt they may inflict.
“Nonetheless, we’re nonetheless but to see the complete affect of the rising commerce warfare with the U.S. on the arduous information, which we anticipate to push the economic system into a gentle recession by mid-year,” he mentioned.
‘Backward information’: Royal Financial institution of Canada
“Higher-looking backward information is much less related given escalating commerce dangers and plunging shopper confidence into March,” Nathan Janzen, assistant chief economist at Royal Financial institution of Canada, mentioned in a notice.
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He mentioned most arduous financial information has but to replicate the drop-off in shopper confidence that was recorded in March by the Financial institution of Canada in a report it launched alongside its final rate of interest determination.
RBC’s monitoring of credit-card transactions has but to point out a decline in spending as much as mid-March, and job openings are higher than they had been at the moment final yr, Janzen mentioned.
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January was the primary time GDP per capita rose over two straight months in two-and-a-half years. Beforehand, it contracted over a number of quarters because the economic system did not maintain tempo with the rise in inhabitants.
“However worldwide commerce dangers proceed to cloud the outlook, with the small print behind one other spherical of anticipated tariff bulletins subsequent week (having) the potential to considerably affect the Canadian financial progress outlook,” he mentioned.
• Electronic mail: gmvsuhanic@postmedia.com
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