A soft start to the year
Canada came out of the gate a little wobbly, with GDP down 0.1% in the first quarter. That makes it two straight quarters of contraction, which is economist-speak for “the engine is sputtering, and somebody check the dashboard lights.”
What dragged it down?
The culprit mix was pretty classic bad-news-economy stuff:
- exports slipped, taking some wind out of growth
- imports rose, which can subtract from GDP math
- business investment weakened
- government investment also cooled off
That said, it wasn’t all gloom. Household spending picked up, so consumers are still showing up like the friend who insists the party’s fine even when the music cuts out.
Why investors should care
A softer Canadian economy can matter for a few reasons. It can nudge the Bank of Canada closer to easing, which changes the mood for bonds, banks, and rate-sensitive sectors. It also hints that companies tied to domestic demand may have a tougher time leaning on the local economy for growth.
Big picture
This is less a dramatic crash landing and more a slow skid — but two quarters of shrinkage is still the kind of thing policymakers and markets tend to notice fast.