Canada’s Q1 GDP Grows 2.2% Annually, Surpassing Expectations

Canada's Q1 GDP Grows 2.2%, Beating Forecasts

Economic Growth Steady as Exports Surge

Statistics Canada reported on Friday that Canada's real Gross Domestic Product (GDP) grew at a 2.2% year-over-year rate in Q1 2025, surpassing the 1.7% market forecast. On a quarterly basis, GDP expanded 0.5%, matching the previous quarter’s performance.

Exports Drive Growth Despite Trade Concerns

A notable driver of the strong performance was export growth, particularly in high-value categories:

• Vehicle exports surged 16.7%
• Machinery, equipment, and parts rose 12.0%

These gains came despite uncertainty around potential US tariffs, signaling robust external demand.

“Total exports rose 1.6% in Q1 2025 after a 1.7% gain in Q4 2024,” Statistics Canada stated.

Market Reaction

The USD/CAD currency pair edged lower, trading slightly below 1.3800, reflecting investor optimism over Canada’s stronger-than-expected economic performance.

Outlook

Canada’s resilient growth, especially in exports, may reduce the likelihood of immediate rate cuts by the Bank of Canada, and adds pressure to closely monitor how geopolitical trade tensions with the US might evolve.

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