The Bank of Canada growth forecast signals a weaker second quarter, with Governor Tiff Macklem warning on Thursday that U.S. tariff uncertainty could drag the economy further.
Macklem addressed reporters alongside Finance Minister François-Philippe Champagne in Banff. He acknowledged that trade tensions have eased slightly but emphasized the need for further clarity. “I expect the second quarter will be quite a bit weaker,” he said.
He linked future growth directly to how the tariff situation evolves. “If things move in the other direction, growth will suffer,” Macklem cautioned.
In April, the Bank of Canada forecast 1.8% annualized GDP growth for Q1. Statistics Canada plans to release official results on May 30, following an earlier estimate of 1.5%.
Macklem noted that many Canadian exporters rushed shipments to the U.S. before tariffs took effect, which helped sustain short-term growth. However, he said businesses have delayed investments and consumers have become more cautious, which could weaken broader recovery efforts.
He added, “Canada is ready to work with the United States to resolve trade issues and restore the clarity needed for consistent growth.”
G7 finance ministers also addressed global uncertainty in their joint statement. Although the communique didn’t mention tariffs directly, Macklem confirmed that trade dominated the talks.
“The message was clear—we must continue reducing uncertainty, especially around trade,” he explained.
Macklem criticized recent U.S. tariff policies for shaking confidence in global trade systems. However, he welcomed the G7’s collaborative tone and said the discussions marked progress.
He concluded, “Lowering uncertainty will allow us to set a more forward-looking course for monetary policy.”
