Canada’s gross domestic product (GDP) shrank by 0.1% in April, according to data released Friday by Statistics Canada, with an early estimate pointing to a similar contraction in May. The back-to-back declines signal mounting pressure on the country’s economy heading into the second quarter.
The drop in April was largely driven by a 1.9% plunge in manufacturing output — the sector’s steepest monthly decline since April 2021. Goods-producing industries as a whole were dragged down by the manufacturing slump, with transportation equipment manufacturing hit especially hard.
Also Read: Best Canadian AI stocks 2025
Statistics Canada linked the decline to growing uncertainty in the automotive sector, where vehicle manufacturers scaled back production in response to tariffs imposed by U.S. President Donald Trump. The auto trade dispute also weighed on wholesale trade, particularly in motor vehicle-related subsectors, as both exports and imports fell.
Looking ahead, the agency forecasts another 0.1% dip in GDP for May, reinforcing expectations of a sluggish second quarter. The Bank of Canada has already cautioned about the growing economic toll of trade barriers. Governor Tiff Macklem recently noted that while first-quarter growth exceeded expectations, much of that momentum came from businesses stockpiling goods in anticipation of the new U.S. tariffs.
Also Read: Stock Investment Canada for beginners
Douglas Porter, chief economist at the Bank of Montreal, told CBC News that the latest GDP figures align with expectations given the high level of trade uncertainty this spring. “What’s surprising,” he said, “is that Statistics Canada initially reported growth in April, which contradicted most forecasts.”
Porter added that while the numbers support lingering concerns about a potential recession, he remains cautious about labeling it a severe downturn. “We could see a couple of quarters with modest GDP declines,” he said, “but that doesn’t necessarily meet the threshold of a full-blown or typical recession.”
Sign Up For our Newsletters to get latest updates
vv66h4