{"id":59158,"date":"2025-04-30T15:50:57","date_gmt":"2025-04-30T15:50:57","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2025\/04\/30\/real-drama-now-begins-as-economists-predict-zero-growth-ahead-off-a-waning-first-quarter\/"},"modified":"2025-04-30T15:50:57","modified_gmt":"2025-04-30T15:50:57","slug":"real-drama-now-begins-as-economists-predict-zero-growth-ahead-off-a-waning-first-quarter","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2025\/04\/30\/real-drama-now-begins-as-economists-predict-zero-growth-ahead-off-a-waning-first-quarter\/","title":{"rendered":"&#039;Real drama now begins&#039; as economists predict zero growth ahead off a waning first quarter"},"content":{"rendered":"<p> \n<br \/><\/p>\n<p>                <iframe loading=\"lazy\" width=\"100%\" height=\"100%\" frameborder=\"0\" allowfullscreen src=\"https:\/\/cdn.jwplayer.com\/videos\/Sv71gtcK.mp4\"><\/iframe><\/p>\n<p> Canada&rsquo;s <\/p>\n<p>                gross domestic product<\/p>\n<p>                 likely rebounded slightly in March after contracting more than expected in February, leading some economists to signal that first-quarter growth will fall short of the Bank of Canada&rsquo;s estimate and be followed by a no-growth second quarter or worse. <\/p>\n<p> A flash estimate for March released by <\/p>\n<p>                Statistics Canada<\/p>\n<p>                 on Wednesday said the economy grew 0.1 per cent month over month, but growth contracted 0.2 per cent in February compared with economists&rsquo; estimate for no change. <\/p>\n<p> The agency said poor weather in February contributed to some of the pullback in February, but economists said Canada&rsquo;s economy has been slowing since posting monthly growth of 0.4 per cent in January. <\/p>\n<p> Here&rsquo;s what they think the numbers mean for the economy, the <\/p>\n<p>                Bank of Canada<\/p>\n<p>                 and interest rates. <\/p>\n<h2>\u2018Starting to wane\u2019: TD<\/h2>\n<p> &ldquo;The economic momentum that carried into the early stages of 2025 is starting to wane,&rdquo; Marc Ercolao, an economist at TD Economics, said in a note, adding that TD is currently forecasting first-quarter annualized GDP growth of 1.5 per cent. <\/p>\n<p> &ldquo;Past this, the outlook is turbulent, with clear downside risks to Canada&rsquo;s economy as the direct impact from tariffs adds to the headwinds from plunging sentiment,&rdquo; he said, referring to Bank of Canada surveys that indicate business and consumer views of the economy have dimmed. <\/p>\n<p> Future interest rate decisions by the <\/p>\n<p>                Bank of Canada<\/p>\n<p>                 will be no easy matter, he said. Policymakers in April decided to hold <\/p>\n<p>                interest rates<\/p>\n<p>                 at 2.75 per cent even though their outlook for the economy was downbeat. <\/p>\n<p> &ldquo;With Canada&rsquo;s housing market visibly strained, and some rollover in labour markets and consumer spending, we&rsquo;d expect the (Bank of Canada) to cut its policy rate by 25 basis points at their next meeting in June,&rdquo; Ercolao said. <\/p>\n<h2>\u2018Sharp\u2019 slowdown: Capital Economics<\/h2>\n<p> &ldquo;There were only tentative signs of a rebound in March,&rdquo; Stephen Brown, deputy chief North America economist at Capital Economics Ltd., said in a note, adding that whatever gains were achieved from improved weather in March were offset by the start of United States tariffs, which will target manufacturing. <\/p>\n<p> He is calling for first-quarter annualized growth of 1.6 per cent, which is below the Bank of Canada&rsquo;s estimate. <\/p>\n<p> The second quarter is a different story, with Capital Economics forecasting annualized GDP of 0.8 per cent. <\/p>\n<p> &ldquo;We expect GDP growth to slow sharply rather than turn negative this quarter despite the imposition of U.S. tariffs,&rdquo; he said. <\/p>\n<h2>\u2018Drama begins now\u2019: BMO<\/h2>\n<p> The flash estimate for growth in March was &ldquo;mildly encouraging,&rdquo; though Statistics Canada &ldquo;badly overestimated&rdquo; its flash estimate for February when it predicted no growth, Douglas Porter, chief economist at BMO Economics, said in a note. <\/p>\n<p> BMO is estimating first-quarter annualized growth of 1.5 per cent. <\/p>\n<p> &ldquo;The real drama now begins, with the tariffs much more of an issue in Q2,&rdquo; he said, adding that &ldquo;in a bit of a warning for what lies ahead, manufacturing and wholesale trade were weak (in March).&rdquo; <\/p>\n<p> The bank expects second-quarter annualized GDP to contract 2.5 per cent, which Porter said might be &ldquo;too pessimistic&rdquo; given the Bank of Canada modelled two scenarios where second-quarter growth is flat or, in its worst-case option, shrinks 1.3 per cent. <\/p>\n<p> However, with the U.S. economy retreating 0.3 per cent in the first quarter, according to data released Wednesday, &ldquo;we would be surprised if GDP (in Canada) manages to grow in Q2,&rdquo; he said. <\/p>\n<h2>U.S. \u2018spillover\u2019: RBC<\/h2>\n<p> A host of factors hurt February&rsquo;s growth more than expected, including poor weather, the end of the GST holiday, volatility in the oil and gas sectors and a decline in consumer and business outlooks due to tariff worries, Claire Fan, a senior economist at RBC Economics, said. <\/p>\n<p> She expects&nbsp;first-quarter annualized growth will be 1.5 per cent based on the &ldquo;partial&rdquo; GDP rebound in March. <\/p>\n<p> &ldquo;The increase in March won&rsquo;t retrace all of the decline in February, but was still better than feared given tariffs and counter tariffs levied at the beginning and in the middle of that month,&rdquo; she said in a note, adding there remain some signs of &ldquo;resilience&rdquo; in the economy based on last month&rsquo;s turnaround and RBC&rsquo;s proprietary credit card information. <\/p>\n<ul class=\"related_links\">\n<li>Economy on track to miss forecast as it shrinks in February<\/li>\n<li>Economy headed for recession this year: Deloitte outlook<\/li>\n<\/ul>\n<p> &ldquo;Looking forward, we expect direct tariff impact will be relatively contained, but a weaker U.S. economy will continue to spill over and negatively impact Canada,&rdquo; Fan said. <\/p>\n<p> RBC is calling for flat second-quarter growth and for the unemployment rate to rise. <\/p>\n<p> <em>\u2022 Email: gmvsuhanic@postmedia.com<\/em> <\/p>\n<p> <em><strong>Bookmark our website and support our journalism:<\/strong> Don\u2019t miss the business news you need to know \u2014 add financialpost.com to your bookmarks and sign up for our newsletters here.<\/em> <\/p>\n\n<br \/>&#039;Real drama now begins&#039; as economists predict zero growth ahead off a waning first quarter<\/a><br \/>\n<br \/>2025-04-30 15:50:57<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Canada&rsquo;s gross domestic product likely rebounded slightly in March after contracting more than expected in February, leading some economists to signal that first-quarter growth will fall short of the Bank&#8230;<\/p>\n","protected":false},"author":2,"featured_media":59159,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":{"0":"post-59158","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy"},"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/59158","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=59158"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/59158\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/59159"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=59158"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=59158"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=59158"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}