The Canadian economy shrank modestly in April by 0.1 per cent, according to Statistics Canada.
That follows an increase of 0.2 per cent in March for real gross domestic product and comes amid fears of a potential recession later this year spurred by the U.S. trade war.
A recession is defined by two consecutive quarters of negative economic growth.
“This isn’t necessarily a sign we’re heading straight into a recession, but the risks are growing and cannot be ignored,” says chief economist David-Alexandre Brassard at CPA Canada.
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“Tariffs have introduced new economic headwinds, and the recent doubling of steel and aluminum tariffs will increase pressure on manufacturing, a sector already showing significant weakness.”
Most economists were expecting April’s GDP to show that the economy expanded by 0.1 per cent or no change at all from March.
Statistics Canada gave a flash-forward estimate for what to expect in May’s GDP report, and the agency is forecasting another contraction by 0.1 per cent.
The economy also expanded in March by more than initially reported, with GDP in the month now showing an increase of 0.2 per cent from 0.1 per cent.
In April, the manufacturing sector contracted by 1.9 per cent, the biggest drop since 2021, and accounted for “nearly all the decline” in the month, according to the report.
Meanwhile, services-producing businesses contributed to growth of 0.1 per cent in April, which the agency says was mostly from the public administration sector and tied to the Canadian federal election.
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