The Canadian economy grew more than economists expected in the first three months of 2025 as businesses tried to get ahead of U.S. President Donald Trump’s threatened tariffs, Statistics Canada reported Friday morning.
Real gross domestic product (GDP) grew at an annualized pace of 2.2 per cent — higher than the agency’s early estimate of 1.5 per cent.
Canada exported more cars, industrial machinery, equipment and parts in the first quarter, StatCan said. At the same time, imports for those kinds of goods also increased.
“The threat of tariffs can be expected to influence trading patterns and incite importers to increase shipments prior to these tariffs being implemented to avoid additional costs,” StatCan wrote.
Economists and markets seem to be mixed on what Friday’s news will mean for the Bank of Canada’s rate decision next Wednesday.
“The upshot is that there is still a strong case for the Bank to cut next week although, amid the extreme tariff uncertainty following events this week, we clearly can’t rule out another pause as the Bank awaits for more information,” wrote Stephen Brown, economist at Capital Economics, in a note to clients. “Indeed, market participants are more convinced than us, with interest rate swaps pricing in an 80 per cent chance of a pause.”
This is a developing story.
