GDP ekes out 0.1% growth in January
Canada’s economy surprised a bit on the upside in January, growing at 0.1% after contracting in the final quarter of 2025.
The gain was driven by a 1.2% increase in mining, quarrying and oil and gas extraction, while manufacturing contracted 1.4%, Statistics Canada reported.
The month-over-month growth beat economists’ estimates of no growth, and StatsCan issued a flash estimate for an increase of 0.2% in February.
Based on those numbers, economists are estimating first-quarter GDP growth of between 1.4% and 1.8%, which matches the Bank of Canada’s forecast in its most recent Monetary Policy Report.
“Canada’s economy looks to be off to a slightly better-than-expected start in 2026 after a lacklustre fourth quarter,” TD Bank economist Marc Ercolao said in a note to clients Tuesday.
Ercolao said the January GDP figures should not affect the Bank of Canada’s next interest rate decision set for April 29. Most analysts expect the bank to keep its key interest rate at 2.25% as it assesses the outlook for Canada’s free-trade negotiations with the Trump administration and the economic impact of the U.S.-initiated war in Iran.
With Canada already performing below its economic potential after a year of damaging tariffs by the U.S., the months ahead in 2026 could be an unpredictable roller coaster for the economy, analysts said.
“The pre-war economic data could scarcely be more stale, but Canada can at least boast, having experienced some better-than-expected output numbers ahead of the mess in the Middle East and the subsequent surge in energy and related costs,” David Rosenberg, president of Rosenberg Research & Associates Inc., said in a note.
