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Global News
26 minutes ago
- Global News
Canada's economy ‘treading water' after GDP dropped for 2nd straight month
Canada's economy shrank in May for the second straight month as the trade war with the United States continues to change some financial priorities for businesses and consumers alike. This is because U.S. President Donald Trump's tariff policies are starting to slowly increase some costs for businesses, which can potentially mean higher prices for consumers if those costs are passed along. However, the economy seems relatively stable for now, according to the latest economic data. 'Canada's economy is treading water, neither sinking nor challenging Canada's world gold medal swimming superstar Summer McIntosh,' says Derek Holt, vice-president and head of capital markets economics at the Bank of Nova Scotia. Statistics Canada reported on Thursday that gross domestic product (GDP) for the month of May showed a 0.1 per cent decline compared with the previous month — the same amount seen in April compared with March. Story continues below advertisement Most economists expected a larger drop of 0.2 per cent for the May report. GDP is the total value of goods produced and services provided in a country, and the figure is updated monthly, quarterly and annually. Most experts consider a period of two consecutive quarters, which covers a period of six months, of GDP decline as meeting the criteria for an economic recession. 2:20 As Trump's tariff deadline looms, where do Canada-U.S. trade talks stand? 'The economy continued to grapple with external headwinds; however, most of the May GDP decline was explained by temporary disruptions to oil extraction due to wildfires, with the manufacturing sector partially retracing a large April decline,' economist Abbey Xu at Royal Bank of Canada says. Get weekly money news Get expert insights, Q&A on markets, housing, inflation, and personal finance information delivered to you every Saturday. Sign up for weekly money newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy 'The Canadian economic outlook remains highly contingent on the evolution of U.S. trade policy.' Prime Minister Mark Carney has been looking to solidify a trade deal with Trump by Aug. 1, but so far, no agreement has been reached. Story continues below advertisement The sectors with the biggest declines in May included mining and quarrying, excluding oil and gas extraction, with a drop of 2.1 per cent. Retail trade also contributed significantly to the overall GDP decline, with a drop of 1.2 per cent, and the subsector that contributed most to the drop was motor vehicles and parts dealers. Statistics Canada notes that the drop in sales of motor vehicles and parts in May followed an increase in sales for the previous two months. The agency also highlights that sales of motor vehicles and parts in May 2025 were still 7.8 per cent higher than in June 2024. Helping to offset some of the GDP declines in May, the sector with the most activity was manufacturing, which grew by 0.7 per cent following a drop of 1.8 per cent in April. Transportation and warehousing increased 0.6 per cent in May, coming off a 0.1 per cent decline in April, and led by rail transportation. 1:46 Auto sales drop as trade war drives prices up: Stat Can NHL playoffs boosted the economy The arts, entertainment and recreation sector also helped offset some of the losses to GDP in May with a 0.2 per cent increase, thanks in part to the NHL playoffs, according to Statistics Canada. Story continues below advertisement 'The arts, entertainment and recreation sector increased 0.2 per cent in May, a third consecutive increase, driven in large part by performing arts, spectator sports and related industries, and heritage institutions,' the agency said in its report. 'For the first time since 2004, three Canadian National Hockey League teams qualified for the second round of the playoffs, resulting in a higher than usual number of games taking place in Canada in May and contributing to increased activity in spectators' sports in the month.' Another sector that saw growth in May is real estate, rental and leasing, with a 0.3 per cent increase, which marked its second straight month of GDP gains. Statistics Canada says this reflects higher home resale activity across the country, and partially offsets the declines for the previous four months. More to come.
26 minutes ago
Trump slams Canada's plan to recognize Palestinian state amid trade talks
U.S. President Donald Trump took to his social media platform just after midnight on Thursday to say he is not pleased with Canada announcing it will recognize a Palestinian state (new window) in September if the West Bank's governing body agrees to make certain commitments. Wow! Canada has just announced that it is backing statehood for Palestine, Trump posted on Truth Social (new window) . That will make it very hard for us to make a Trade Deal with them. Oh' Canada!!! Prime Minister Mark Carney confirmed earlier on Wednesday that trade negotiations have not been finalized just two days ahead of the deadline. It is possible that [negotiations] may not conclude by the first of August, Carney said at a news conference on Wednesday. But we'll see with the teams there. We're working hard. WATCH | Trade deadline nears: Trump set an Aug. 1 deadline for Canada to reach a trade deal and has threatened to impose a 35 per cent tariff (new window) on goods that don't comply with the Canada-U.S.-Mexico Agreement (CUSMA). That rate would apply to Canadian exports currently being tariffed at 25 per cent, under Trump's emergency powers, citing what he says is a national security threat from fentanyl trafficking. The president has been very clear … that there are certain sectors that are strategic, in their judgment, to the United States' economy: aluminum steel, automobiles, pharmaceuticals, semiconductors and lumber, Carney said. The prime minister previously hinted that the Canadian government is in no rush to finalize a deal by Friday, saying last week that his objective is "not to reach a deal whatever it costs (new window) ." On Monday, Carney said in P.E.I. that trade negotiations with the United States are at an "intense phase (new window) ." Tariffs ordered on some copper products On Wednesday, Trump announced that the U.S. would levy a 50 per cent tariff (new window) on copper products such as pipes and wiring, starting Friday. The White House said it would apply only to semi-finished copper products and other products that heavily use copper when being manufactured. Trump suggested last Friday that the U.S. might not reach an agreement (new window) with Canada and that more tariffs could be in store for the country. I think Canada could be one where there's just a tariff, not really a negotiation, Trump told reporters. Canada's top trade negotiators — Kirsten Hillman, Canada's ambassador to the U.S., and Dominic LeBlanc, minister responsible for Canada-U.S trade — have also downplayed (new window) the likelihood of the two countries reaching a deal by Aug. 1. It's important for us to recognize that there is a time when the deal is the right deal, and it's important for us to be in a position to continue negotiating until we get to that point, Hillman said last week. With files from Darren Major, David Thurton and Reuters
CTV News
26 minutes ago
- CTV News
Lithuania's prime minister steps down after investigations and protests
Lithuania's Prime Minister Gintautas Paluckas speaks to the media at the Parliament in Vilnius, Lithuania, Nov. 21, 2024. (AP Photo/Mindaugas Kulbis, File) VILNIUS, Lithuania — Lithuanian Prime Minister Gintautas Paluckas stepped down Thursday, following investigations into his business dealings that prompted protests calling for his resignation. Paluckas, a newly established leader of the center-left Social Democrats, ascended to the role late last year after a three-party coalition formed following a parliamentary election in October in Lithuania. His entire Cabinet is also expected to resign, potentially leaving the Baltic country without an effective government weeks before Russia holds joint military exercises with neighboring Belarus. 'Seeing how the scandals are hindering the work of the government, I believe that I cannot allow our ruling coalition and the Cabinet to become hostages to these scandals,' Paluckas wrote in a letter to Social Democratic party members. 'Therefore, I have decided to take a quick and decisive decision. 'I never cling to any position in life — and so I am open to all scenarios and decisions.' President Gitanas Nausėda announced Paluckas' resignation to the media on Thursday morning. Lithuanian foreign policy is unlikely to change as a result of the government shake-up. Nausėda, who was elected separately, is the country's face on the world stage and has been one of the most stalwart supporters of Ukraine's fight against invading Russian forces. Paluckas has recently been dogged by media investigations into his business and financial dealings. Several media outlets published investigations in July regarding Paluckas' past and present ventures and alleged mishandlings, including ones more than a decade ago. Anti-corruption and law enforcement agencies in the country subsequently launched their own inquiries. In a devastating blow to his reputation, the media also revealed that Paluckas never paid a significant part of a 16,500-euro (around $19,000) fine in connection with a 2012 criminal case dubbed the 'rat poison scandal.' Paluckas was convicted of mishandling the bidding process for Vilnius' rat extermination services while serving as the capital city's municipality administration director. In 2012, judges at Lithuania's top court ruled that he abused his official position by illegally granting privileges to the company that offered the highest price in the bid. He was also sentenced to two years behind bars, but the sentence was suspended for one year and he ultimately was never imprisoned. The Social Democratic party leader denied any wrongdoing regarding his business affairs, labeling the criticism as part of a 'coordinated attack' by political opponents. He resigned before the opposition could formally launch impeachment proceedings. New coalition talks are expected to start shortly to form a new Cabinet. Liudas Dapkus, The Associated Press
