Canada faces tariff-induced recession as Trump moves hit economy hard despite Carney's pledge

Donald Trump's tariffs have sent shockwaves around the world and Canada is now facing risk of slipping into a recession due to the taxes imposed by the U.S President. The development comes even as Canada Prime Minister Mark Carney vowed to withstand Trump onslaught.

However, the data shows that Canada's GDP growth forecast has been cut from 1.8 per cent to 0.9 per cent. Canada's real GDP declined by 0.4 per cent. Unemployment rate has gone up to 7.1 per cent, highest since Pandemic, as per a report on The Telegraph.

Canadian dollar strengthened against its U.S. counterpart on Friday as stocks and oil prices rose, but the currency's move was not enough to snap a weekly losing streak. The loonie was trading 0.3 per cent higher at 1.4015 per U.S. dollar, or 71.35 U.S. cents, recovering some ground after it touched on Tuesday a six-month low at 1.4079.

For the week, the currency was down 0.1 per cent, its fourth straight weekly decline.

Bank of Canada will be putting more emphasis on potential risks when it decides what to do about interest rates later this month even as it tries to be more forward-looking, Governor Tiff Macklem said on Friday.

Money markets forecast that a roughly 64 per cent chance of a 25 basis point rate cut later this month which will bring down the benchmark policy rate to 2.25 per cent. The bank had cut rates last month by 25 basis points to 2.5 per cent.

Before the next rates decision, the BoC will have the benefit of a business and consumer survey which will give insights into inflation expectations, investments and spending. This survey is scheduled for Monday. It will also get the latest inflation report on Tuesday which will show where consumer prices were in September.

The BoC expects GDP growth to resume after a contraction of 1.6 per cent on an annualized basis in the second quarter, Macklem said, but he expects it to still be soft and below potential growth which will not be enough to close the output gap.

FAQs

Q1. Who is Prime Minister of Canada?
A1. Prime Minister of Canada is Mark Carney.

Q2. Who is President of USA?
A2. President of USA is Donald Trump.