FX.co ★ Canada GDP Grows Solidly in Q1

In the first quarter of 2025, Canada's GDP increased by 0.5% compared to the previous quarter, sustaining the revised 0.5% growth achieved earlier and surpassing expectations. This growth, although exceeding the Bank of Canada's projections, was primarily driven by net foreign demand and inventory build-up—a response by companies to anticipated US tariffs—rather than intrinsic economic strength. Goods and services exports rose by 1.6%, while imports experienced a more modest increase of 1.1%. Concurrently, business non-farm inventories saw a rapid accumulation after previous withdrawals, contributing $8.7 billion to the GDP. Despite these gains, economic uncertainty led to a deceleration in household consumption, which increased by only 0.3% compared to 1.2% in the fourth quarter of 2024. Additionally, government spending shrank for the first time in a year, declining by 0.8% as opposed to a 2.3% increase previously. On an annualized scale, Canada's GDP grew by 2.2%, significantly outperforming the anticipated 1.7%.