Canada’s economy is in a “vulnerable position,” according to at least one economist, after recent GDP data suggested a technical recession.
Statistics Canada said Friday that GDP fell 0.1 per cent annualized in the first quarter of 2026, following a revised one per cent annualized decline in the fourth quarter of 2025. A technical recession is most commonly defined as two consecutive quarters of negative economic growth.
Friday’s release surprised some economists who were expecting a positive result for the quarter.
“Growth in the first quarter was a disappointment. We are certainly in a vulnerable position as some of the key growth engines stall,” chief economist Andrew DiCapua of the Business Data Lab and the Canadian Chamber of Commerce said in a statement.
“April offers some hope, but it does not prepare the economy for the growth we expected this year.”
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The statement added: “The outlook remains fluid.”
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On a quarterly basis, growth has remained essentially unchanged, the agency says, but small fluctuations in the quarterly figures are magnified when converted to annual rates. Real GDP fell last October and March, but growth was either flat or positive in the four months in between.
“The Canadian economy continued to struggle in the first quarter as GDP posted another contraction,” Katherine Judge of CIBC Economics said in a statement.
“The 0.1 percent annual decline was in stark contrast to the consensus of a recovery to 1.5 percent.”
The judge emphasizes that there have been significant declines in business and residential investment as well as government spending. She added that this was the fifth consecutive decline in business investment amid uncertainty caused by the trade war and US tariffs.
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Statistics Canada blames higher gold imports and a weak month for Canada’s extractive industry in March for the slowdown in recent economic activity.
Exports overall fell 0.1 percent in the first three months of the year, even as Canada’s oil sector increased shipments of crude oil products and natural gas. According to Statistics Canada, declines in exports of passenger cars and light commercial vehicles offset most of those gains as the sector continues to be hit by U.S. tariffs.
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Friday’s release came a day after the Bank of Canada said the economy was in a “volatile” global environment and was vulnerable to shocks as households and businesses continued to struggle.
The agency’s first estimates for real GDP in April project a sharp rebound to 0.4 percent growth this month as the mining, quarrying and oil and gas sectors return to growth.
– With files from The Canadian Press
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