Canada’s economy slipped into a technical recession in the first quarter of 2026 after recording a second consecutive quarter of annualized GDP contraction, according to new data from Statistics Canada. Real GDP declined at an annualized rate of 0.1 per cent between January and March, following a revised one per cent contraction in the final quarter of 2025. The result fell well short of forecasts from economists, who had expected annualized growth of 1.5 per cent.
While GDP remained flat on a quarter-over-quarter basis—avoiding a recession under one common definition—the back-to-back annualized declines have raised concerns about the strength of Canada’s economy. Statistics Canada said increased imports weighed on growth, although higher inventory accumulation helped offset some of the impact.
Consumer spending, particularly on financial services and food, provided support to the economy, but weaker business and government investment largely erased those gains. Economists say prolonged trade uncertainty and tariff-related pressures have dampened hiring, investment and spending activity, while also contributing to higher prices. The last time Canada experienced a technical recession was during the COVID-19 pandemic in 2020, following a similar downturn during the 2015 oil price shock.
