Canada’s economy showed signs of slowing in March 2026 as higher trade uncertainty, softer investment activity, and weaker resource output weighed on growth heading into the second quarter.
Statistics Canada reported that real gross domestic product by industry edged down 0.1% in March, following a 0.2% gain in February. The decline came as decreases in mining, oil and gas extraction, retail trade, and construction offset gains in wholesale trade and transportation services.
The March reading capped off a flat first quarter for the Canadian economy after GDP contracted in late 2025. Economists said the latest data reflects an economy struggling to maintain momentum amid elevated borrowing costs and continued uncertainty surrounding global trade conditions. Business investment also remained weak, marking a fifth consecutive quarterly decline in capital spending.
Despite the softer monthly result, household spending continued to provide some support for growth, particularly in financial services and consumer staples. Canada’s export sector also benefited from stronger energy prices and rising gold shipments during the quarter, though import growth partially offset those gains.
Inflation pressures remained elevated in March, with consumer prices rising 2.4% year-over-year, driven largely by higher gasoline and transportation costs linked to geopolitical tensions in the Middle East.
Looking ahead, early estimates suggest the economy may rebound modestly in April, with preliminary data pointing to 0.4% monthly growth supported by manufacturing and transportation activity.
Still, analysts expect the Bank of Canada to remain cautious as policymakers weigh slowing economic growth against persistent inflation risks.
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