Canada’s economy shrank more than expected in the second quarter as U.S. tariffs hurt exports, though higher spending by households and governments softened the blow, new data showed Friday.
From April to June, the country’s GDP fell at an annual rate of 1.6 per cent, compared to 2 per cent growth in the first three months of the year, Statistics Canada said. Overall, the economy grew just 0.4 per cent in the first half of 2025.
It was the first time in nearly two years that the economy has seen a quarterly decline.
The weaker numbers are raising chances that the Bank of Canada could cut interest rates in September. The central bank has held its key rate at 2.75 per cent for the past three meetings. Before the new data came out, traders saw about a 40 per cent chance of a cut on Sept. 17.
