Canada's Economic Growth Faces Tariff Challenge

Canada's GDP grew by 0.4% in January with momentum from previous months. However, growth faces challenges due to U.S. tariffs and potential retaliatory actions. Analysts predict flat growth for February. Key growth sectors included oil and gas extraction, with retail trade as a significant dampener.

Canada's Gross Domestic Product rose by 0.4% in January, showing continued economic momentum, according to recent data. The surge reflects robust activity in the last two quarters, largely driven by consumer spending and investment, buoyed by seven rounds of interest rate cuts.

However, looming U.S. tariffs on various products and potential retaliatory tariffs could dim Canada's economic outlook, caution the Bank of Canada and economists. Although hard data remains strong, a gap between these figures and business and consumer surveys has been noted, suggesting vulnerability in the growth trajectory.

Statscan's recent estimates indicate no growth for February, influenced by mixed sector performances. Mining, oil, gas extraction, and manufacturing were significant contributors to growth in January, while retail trade underperformed. Analysts monitor how upcoming U.S. tariffs might impact Canada's economic projections.

(With inputs from agencies.)