Canada slips into technical recession as economy stalls in Q1: StatCan

Statistics Canada says economic growth stalled in the first quarter, leading to a second consecutive decline in real gross domestic product.

That meets some definitions for a technical recession, though StatCan’s Friday report painted a mixed picture of the economy.

Real gross domestic product by expenditure was essentially unchanged on a quarter-over-quarter basis, StatCan said. Converting that to an annualized rate — the figure most economists pay close attention to — magnifies the quarterly changes and results in a decline of 0.1 per cent in real GDP for the first quarter.

That follows a real GDP drop of one per cent in the fourth quarter of 2025, a figure StatCan revised lower on Friday. Three of the last four quarters in Canada have now posted negative real GDP growth.

Heading into Friday’s release, the consensus among economists had called for real gross domestic product growth of 1.5 per cent on an annualized basis in the first quarter.

Higher imports of gold dragged down activity in the quarter, offset by a ramp-up in businesses accumulating inventory. Business capital investment fell for a fifth consecutive quarter, and weak resale activity in the housing market also hurt the first-quarter figures.

StatCan mainly blamed weakness in Canada’s resource extraction industries and in construction activity for a 0.1 per cent decline in real GDP in March.

The last two quarterly contractions are mostly due to real GDP declines in October and March. Growth was either flat or modestly positive for the four months in between.

While two quarters in a row of negative growth meets the bar for a technical recession, many economists also gauge the breadth and depth of a downturn before declaring a formal recession.

The agency’s early estimates for real GDP in April call for a sharp rebound to 0.4 per cent growth in the month as the mining, quarrying and oil and gas sectors returned to growth. Those figures are expected to be revised next month.

Adding to the murky view was that the monthly figures used to track real GDP by industry suggest growth was mildly positive in the first quarter of the year, compared with the annualized contraction in real GDP by expenditure.

It’s not uncommon for these two measures of the economy to differ by a few tenths of a percentage point, as each metric uses slightly different data sources and methodology to arrive at the final figures.

Real GDP also rose 0.2 per cent on a quarterly basis in the first three months of the year, StatCan said, as Canada’s population shrank for a second quarter in a row.

This report by The Canadian Press was first published May 29, 2026.

By Craig Lord | Copyright 2026, The Canadian Press. All rights reserved.