![\"HCP_Politics03092026_003.JPG\"](\"https:\/\/www.europesays.com\/ie\/wp-content\/uploads\/2026\/04\/9d5801fb864c5d2faf27366630b5e804.jpeg\")
Economists are estimating first-quarter gross domestic product growth of between 1.4 per cent and 1.8 per cent, which was the Bank of Canada’s forecast in its most recent monetary policy report. (Credit: HYUNGCHEOL PARK\/Postmedia files) <\/p>\n
Canada\u2019s better-than-expected gross domestic product<\/a> (GDP) growth has put the economy on track to get close to or meet the Bank of Canada<\/a>\u2018s outlook for the first quarter, economists said.<\/p>\n Statistics Canada said GDP in January rose<\/a> 0.1 per cent month over month, beating economist estimates of no growth, and the agency issued a flash estimate for an increase of 0.2 per cent in February.<\/p>\n Based on those numbers, economists are estimating first-quarter GDP growth of between 1.4 per cent and 1.8 per cent, which was the Bank of Canada\u2019s forecast in its most recent monetary policy report (MPR).<\/p>\n Prior to the release of the latest GDP figures, many economists were calling for sub-one per cent annualized growth in the first quarter based on other data.<\/p>\n Here\u2019s what economists say the GDP numbers mean for the central bank and interest rates<\/a>.<\/p>\n \u201cThe pre-war economic data could scarcely be more stale, but Canada can at least boast, having experienced some better-than-expected output numbers ahead of the mess in the Middle East and the subsequent surge in energy and related costs,\u201d David Rosenberg, president of Rosenberg Research & Associates Inc., said in a note.<\/p>\n He estimates first-quarter annualized GDP growth will be 1.4 per cent and year-over-year growth will be one per cent, which he said still falls short of the economy\u2019s potential for growth.<\/p>\n Much of the growth in January came from the oil and gas sector<\/a>, notably in Newfoundland and Labrador and Saskatchewan, Rosenberg said. Elsewhere, the economy \u201cflatlined,\u201d with industrial production shrinking by two per cent year over year.<\/p>\n \u201cThe bottom line is that this data release is old news and was mixed overall, despite beating market expectations,\u201d he said.<\/p>\n He expects the Bank of Canada will keep rates where they are, but said if policymakers do make a move, they will cut because the economy is \u201cexpanding below trend.\u201d<\/p>\n \u201cThe year 2026 is off to a strong start in terms of economic growth,\u201d Matthieu Arseneau and Alexandra Ducharme, economists at National Bank of Canada, said in a note.<\/p>\n They said January\u2019s consensus-beating result was surprising given that poor weather hit sectors such as transportation, while auto manufacturing was due to longer-than-expected retooling periods.<\/p>\n Growth contracted in nine of 20 sectors in January, but mining and oil and gas expanded by 1.2 per cent. Construction rose 1.1 per cent and looks to be on the rebound in the first quarter.<\/p>\n \u201cConsumers also seem to be holding up well, with retail sales and accommodation and food services posting solid increases,\u201d the pair said.<\/p>\n February\u2019s outlook provided another dose of good news, with Arseneau and Ducharme estimating first-quarter annualized GDP growth will come in at 1.5 per cent, assuming flat growth in March. GDP per capita could increase 2.5 per cent year over year, the largest rise since the second quarter of 2022.<\/p>\n \u201cThis morning\u2019s report is reassuring, but it doesn\u2019t mean the Canadian economy<\/a> is sailing smoothly,\u201d they said.<\/p>\n The economy has been riding a \u201crollercoaster\u201d as growth rose and fell over the past year, contracting 0.6 per cent annualized in the fourth quarter after rising 2.4 per cent in the third.<\/p>\n Challenges are baked in, including a slowing employment market, weak hiring and investment intentions on the part of business and rising energy costs for consumers.<\/p>\n \u201cWe remain skeptical about the economy\u2019s overall ability to benefit from recent geopolitical developments,\u201d they said, adding they don\u2019t believe higher oil prices will translate into more investment from the energy sector.<\/p>\n