Bloomberg analysts suggest Canada is entering recession amid trade tensions

According to strategists surveyed by Bloomberg, Canada’s economy is likely to be in the early stages of a recession, as unemployment rises and exports decline amid trade tensions with the United States.

The agency expects Canada's GDP to contract by 1% year-on-year in the second quarter and by 0.1% in the third quarter, meeting the technical definition of a recession.

Forecasters estimate that Canadian exports will drop 7.4% on an annualized basis from April to June. This decline reflects supply chain disruptions in early 2025, when American importers delayed shipments due to uncertainty surrounding the US administration's policy.

The Canada-US trade dispute is also hitting the labor market and household consumption. Bloomberg-quoted strategists predict unemployment will rise to 7.2% in the second half of the year before beginning to decline in 2026.

Moreover, experts forecast that Canada's inflation will remain above the central bank's target level, with expectations of 2.1% in the third quarter and 2.2% in the fourth quarter.