Canada's Economy Continues to Struggle in Q1 But Q2 Points to Better Start, Says CIBC

08:59 AM EDT, 05/29/2026 (MT Newswires) -- The Canadian economy continued to struggle in Q1 as gross domestic product posted another decline, said CIBC after Friday's GDP data.

The 0.1% annualized drop was in stark contrast with the consensus for a rebound to 1.5%, noted the bank.

Increases in consumption and inventories were offset by a drop in business investment and government spending, as well as a subtraction from net trade as imports increased and exports fell, while residential investment was also down sharply.

This marks the fifth drop in business investment in a row, as trade uncertainty continues to weigh on activity, stated CIBC.

That left final domestic demand at 0.4% quarter-over-quarter annualized decline, down from 2.7% in the prior quarter, while the household saving rate eased off further to 3.5%, the lowest level in two years, which doesn't bode well for consumption in the coming quarter, added the bank.

Q2 got off to a better start, however, with the advance estimate suggesting a 0.4% month-over-month increase in GDP, pointed out CIBC.

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