Canada’s Economy Expanded 0.5% In First Quarter

Canada’s gross domestic product (GDP) increased 0.5% in the year’s first quarter, the same rate of growth as in the previous fourth quarter of 2024. Statistics Canada said that exports of goods were largely responsible for the Q1 growth, followed by accumulations of business non-farm inventories. Higher imports and weak residential home sales were a drag on Canada’s economic growth between January and the end of March. GDP in Q1 grew by 2.2% on an annualized basis, slightly ahead of the 2.1% growth posted in the previous quarter.Analysts polled by the Reuters news agency had expected first-quarter GDP to expand by 1.7% on annualized basis.On a per capita basis, Canada’s GDP increased 0.4% in the first quarter, following growth of 0.1% in the previous quarter. Canada’s exports rose 1.6% in the first quarter of 2025 after increasing 1.7% in the fourth and final quarter of 2024. Exports in Q1 got a big boost from looming U.S. tariffs, said Statistics Canada, with exports of motor vehicles rising nearly 17% and industrial machinery and equipment jumping 12% higher.At the same time, imports increased 1.1% in the quarter, following a 0.6% rise in the previous quarter. Business non-farm inventories grew in the first quarter, after withdrawals were seen in the previous quarter. Among Canadian households, spending slowed to 0.3% in the year’s first three months after rising 1.2% in the fourth quarter of 2024. Growth in spending during Q1 was driven by rental fees for housing and financial services. Compensation of employees rose 0.8% in Q1 after increasing at a similar pace in the fourth quarter of 2024. At the same time, the household savings rate slowed to 5.7% in the first quarter, the lowest rate of growth since the first quarter of 2024.Investment income received declined 1.7% in the first quarter, fuelled by declines in interest received on deposits, securities and other assets.The gross operating surplus of corporations increased 1.4% in the first quarter, after rising 3.7% in the previous fourth quarter of 2024.