Canada has entered a technical recession after two consecutive quarters of economic contraction, marking its weakest performance since the post-pandemic recovery period.
According to official data, real GDP declined by 0.1% in the first quarter of 2026, following a 1.0% contraction in the fourth quarter of 2025.
This confirms two straight quarters of negative growth, a common technical indicator of recession, reported The Kobeissi Letter.
The latest figures came as a surprise to Canadian economists, who had forecast growth of around 1.5 percent for the quarter. Instead, the economy continued to weaken, reflecting broader pressure across key sectors.
The downturn is also being reflected in labour market conditions, with signs of softness emerging alongside reduced economic activity.
External trade pressures, including ongoing tariff-related strains, may be contributing to the slowdown.
At the same time, household financial resilience appears to be weakening. Canada’s household savings rate fell to 3.5 percent, its lowest level since early 2024.
The combination of slowing growth, weaker savings, and external trade pressures could keep Canada’s economy under strain in the coming months.
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