Preliminary data released by Statistics Canada shows that the national economy grew an annualized 2.5% in this year’s first quarter.
The quarterly result comes as gross domestic product (GDP) across Canada rose 0.5% in January, 0.2% in February, and was unchanged in March.
The monthly GDP figures show a consistent pattern of economic slowdown, reinforcing expectations that the Bank of Canada will lower interest rates in coming months.
Although Canada’s economy continues to expand and has avoided a recession, economists say that growth across the country is slowing as high interest rates take their toll.
In April, Bank of Canada Governor Tiff Macklem said that the central bank is seeing the right conditions to begin lowering its trendsetting overnight interest rate from its current level of 5%.
The Bank of Canada has said that it wants to see lower inflation and a slowing economy before it moves to cut interest rates.
Canada’s inflation rate is currently at 2.9%, down from a peak of more than 8% in June 2022.
Markets are betting that the Bank of Canada will announce its first rate cut at its next meeting on June 5, though some economists say the first rate cut is more likely at the July 24 meeting.
Economic sectors in Canada that continue to grow include transportation and warehousing, notably air transportation.
However, that growth has been offset by weakness in goods-producing industries, as well as
utilities and manufacturing, where business spending has declined.
