Canada’s economic growth halted in February due to trade tensions

After growing strongly early this year, the Canadian economy faced serious obstacles to further development, Bloomberg says. According to Statistics Canada, the country's GDP was flat in February despite January’s gain of 0.4%. 

The news agency reports that January’s growth was fuelled by companies rushing to finalize deals before the imposition of new US import duties. February saw a decline in business activity caused by tariff threats reinforced by President Trump’s actions. Companies expected worsening trade conditions and cut back on investment. Rising prices also made consumers reduce spending on durable goods. 

Governor of the Bank of Canada highlights that the regulator’s actions are limited due to the current circumstances. Given the risk of higher inflation caused by trade tensions, the central bank has to balance between supporting the economy and controlling prices.

US trade restrictions pose a threat of a recession for the Canadian economy, Bloomberg emphasizes. At the same time, Canada's retaliatory measures, including reciprocal duties, increase inflationary pressure, complicating monetary control.