Canada GDP Research Brief

Exports and stockpiling boosted growth. Canada’s economy grew at an annualized rate of 2.2 per cent in the first quarter of 2025, surpassing market expectations. This strength was driven almost entirely by exports and inventory accumulation, as trade tensions prompted front-loading of shipments ahead of new tariffs. In contrast, final domestic demand weakened sharply, contracting by 0.1 per cent after a 5.2 per cent increase in the previous quarter. Tariff threats and the subsequent rise in U.S. import duties dampened consumer and business sentiment, resulting in a marked slowdown in household spending and an outright decline in home sales and business investment. Looking ahead, growth led by exports and inventory buildup appears unsustainable, suggesting a likely deceleration in GDP growth in the second quarter