Canada Faces Economic Contraction Amid U.S. Tariff Tensions
Canada's economy shrank by 0.1% in April, mainly due to declines in goods-producing sectors affected by U.S. tariffs. Manufacturing and wholesale trade experienced significant reductions, impacting GDP. Despite growth in finance, overall Q2 projections remain negative with potential Bank of Canada rate cuts on the horizon.
Canada's economy shrank in April, with a 0.1% contraction largely driven by declines in goods-producing industries, according to Statistics Canada. This sector decline has been attributed to the ongoing U.S. tariffs and economic uncertainty, overshadowing gains in services.
The Reuters poll had anticipated a flat performance but April's decline, coupled with an advanced estimate for May indicating another 0.1% drop, spells concern for the second-quarter GDP. Economists warn of the significant impact U.S. tariffs could have on Canada's economic performance.
Manufacturing output, which contributes a notable portion to GDP, fell drastically by 1.9%, marking its steepest fall since the pandemic period. The Bank of Canada has signaled that the second quarter's growth will likely be weaker, with investment sluggish and layoffs increasing.
(With inputs from agencies.)
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