Canada's GDP Sees Unexpected Stability Amid Trade Challenges

Canada's GDP shrank 0.1% in May but is expected to rebound by 0.1% in June. The services sector, contributing significantly to GDP, had mixed outcomes, with retail trade hitting lows. Manufacturing saw growth, countering earlier declines. Trade negotiations with the U.S. are ongoing amid economic challenges.


Devdiscourse News Desk | Updated: 31-07-2025 18:02 IST | Created: 31-07-2025 18:02 IST
Canada's GDP Sees Unexpected Stability Amid Trade Challenges
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Canada's economic landscape is showing resilience despite a challenging backdrop of trade negotiations. The country's GDP contracted slightly by 0.1% in May, yet a promising uptick of 0.1% growth is anticipated for June, according to Statistics Canada. This forecast is bolstered by a potential 0.1% annualized expansion in the second quarter.

The retail trade sector emerged as a significant drag on the economy, contracting by 1.2% in May, while the broader services sector remained flat. Key sectors like real estate and transportation helped offset the decline. In contrast, goods-producing industries faced headwinds, with mining and oil extraction down by 1%, while manufacturing showed a positive reversal with a 0.7% growth due to higher inventory levels.

Amidst ongoing trade talks with the U.S., Canada's economic trajectory remains uncertain. The Bank of Canada's decision to maintain interest rates signals caution, yet the potential growth in Q2 diminishes the chance of rate cuts in September. As negotiations continue, the outcomes will be crucial for future economic strategies.

(With inputs from agencies.)

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