Canada's Economic Slowdown: Impact of Tariffs and Weather Woes

Canada's GDP fell by 0.2% in February due to shrinking activities in mining, oil, gas, and construction. Adverse weather and U.S. tariffs are expected to further slow growth. The Canadian dollar weakened, while two-year government bond yields dropped. Analysts predict a 1.5% growth in Q1 2023.

In a surprising turn, Canada's GDP contracted by 0.2% in February, marking a downturn not seen since November. Shrinking activities in critical sectors such as mining, oil, gas, and construction led to the decline, data revealed on Wednesday.

While adverse weather across provinces contributed to the slowdown, looming U.S. tariffs, driven by President Trump's constant threats, have strained economic growth. February saw a slight uptick in manufacturing due to precautionary purchases, but overall demand and investment are under pressure.

Consequently, the Canadian dollar weakened slightly, and bond yields fell as markets adjusted their expectations for an interest rate cut in June. Despite challenges, the economy is projected to grow by 0.1% in March, with a 1.5% annualized growth predicted for Q1 2023.

(With inputs from agencies.)