According to economists Matthieu Arseneau and Alexandra Ducharme from the National Bank of Canada (NBC), the Canadian economy expanded by 0.2% in February, with first quarter Gross Domestic Product (GDP) by industry tracking at a 1.7% annualized rate [1]. The economists note that the rebound in manufacturing was largely technical, and that, when excluding this sector, overall economic activity stagnated [1].
Despite these mixed signals, GDP per capita is projected to achieve its strongest growth in 15 quarters, rising by 2.1% on an annualized basis [1]. However, the analysts caution that this growth is occurring in the context of a shrinking population, which is limiting the economy's potential output [1].
The report highlights several ongoing vulnerabilities for the Canadian economy, including tariffs, geopolitical tensions, higher commodity prices, and a weak real estate sector [1]. While the data confirms that the Canadian economy has remained resilient in the first quarter despite these headwinds, the economists warn that past performance does not guarantee continued growth [1].
Looking ahead, the economists expect stagnation in March, suggesting that the momentum seen in early 2024 may not persist into the coming months [1].
CONCLUSION
Canada's economy demonstrated resilience in Q1 with 1.7% annualized GDP growth and a notable increase in GDP per capita. Nevertheless, persistent structural vulnerabilities and expectations of stagnation in March temper the positive outlook, indicating that future growth remains uncertain.