Canada slips into technical recession

OTTAWA: Canada’s economy contracted at an annualised rate of 0.1% in the first quarter from a year earlier, official data showed on Friday, marking a second straight quarter of annualised decline and putting the country in what some economists describe as a technical recession.

Statistics Canada said the first-quarter reading followed a downwardly revised 1% contraction in the fourth quarter of last year. The data came as Canada faces continued uncertainty linked to US tariffs, which has weighed on the economic outlook.

The Canadian economy had largely absorbed trade uncertainty and tariff effects for more than a year, but the spillover from tariffs has reduced investment, hiring and spending while also pushing prices higher. The coming review of the North American free trade deal and the shock to crude prices tied to the Middle East war had created further uncertainty.

Business capital investment fell 0.7% in the quarter, its fifth consecutive quarterly decline, Statistics Canada said. On a monthly basis, gross domestic product in March fell 0.1%, compared with expectations for flat growth. An advance estimate from the agency showed April growth was likely at 0.4%, pointing to a stronger start to the second quarter.