CFIB economic forecast predicts significant contraction in second quarter

The Canadian flag is seen flying behind the National Archives building in Ottawa Friday, Feb 14, 2025 in Ottawa. THE CANADIAN PRESS/Adrian Wyld

OTTAWA — A forecast by the Canadian Federation of Independent Business estimates the economy saw muted growth in the first three months of the year and predicts a significant contraction for the second quarter.

The report estimates the Canadian economy grew at an annualized rate of 0.8 per cent in the first quarter of the year.

However, it forecasts the economy will contract at an annualized rate of 5.6 per cent in the second quarter.

The report, based on the CFIB’s most recent monthly business barometer data, says the drop comes from a historically low long-term business sentiment in the context of the trade war.

U.S. President Donald Trump has hit Canada with a broad range of tariffs, while Ottawa has responded with its own set of tariffs on goods coming from the U.S.

CFIB chief economist Simon Gaudreault says the raging trade war will likely drive up the costs of doing business and lead to inflation.

This report by The Canadian Press was first published April 24, 2025.