Canada's GDP Faces Unexpected February Contraction Amid Rising Tariff Worries

Canada's GDP shrank by 0.2% in February, marking the first contraction since November. The downturn was driven by shrinking sectors like mining, oil and gas, and construction, and compounded by tariff threats from the U.S. A 0.1% expansion is anticipated in March, with a 1.5% annualized growth expected in Q1.

In a surprising turn of events, Canada's gross domestic product (GDP) contracted by 0.2% in February, marking the first such contraction since November, according to data released on Wednesday. The decline reflects shrinking activities in critical sectors, including mining, oil and gas, and construction.

The contraction comes in the wake of U.S. President Donald Trump's persistent tariff threats, leading to preemptive purchasing that inflated inventories and stifled demand, ultimately hampering investment. Meanwhile, adverse weather conditions also contributed to the economic slowdown during the reported month.

While analysts had expected economic stability, initial figures from Statistics Canada suggest a modest expansion of 0.1% in March, and an annualized growth rate of 1.5% for the first quarter. The Bank of Canada and economists warn of challenging times ahead as the nation contends with U.S. tariffs that impact key industries.

(With inputs from agencies.)