Canadians voted yesterday in a tightly contested federal election between the Liberals and Conservatives. The result will remove the uncertainty that the race added to the economic backdrop. Wednesday’s gross domestic product (GDP) release and forecast could offer crucial insights about how trade tensions with the US are impacting Canada’s economic momentum.

• The new Prime Minister will face immediate economic pressures. Much of the campaign had been affected by tariff negotiations and concerns. A relatively strong turnout was expected. Preliminary results were expected by late Monday night or early this morning.
• Canada’s GDP will be released tomorrow. Trade developments have left tariffs on key Canadian sectors in place. This has negatively impacted consumer confidence, business sentiment and growth prospects. Some economists forecast Canada’s economy to contract in the second quarter.
• The election result removes an element of uncertainty. Previous Bank of Canada reports have already flagged the negative impact of tariffs on business investment and consumer confidence, with businesses pausing hiring and spending plans. Consumers will have one less thing to worry about after the election results are released.
• Wall Street is cautious ahead of key reports. Earnings from major tech companies will be released this week. The data could provide signals about the strength of corporate profits and whether slowing growth might reinforce expectations for interest-rate cuts.

After yesterday’s election, Canada’s new government will have no time to rest and will face pressing economic challenges. Softer economic data on Wednesday could reinforce expectations for a more accommodative stance from the Bank of Canada. Policymakers have already indicated they are monitoring the impact of tariffs on inflation and growth. Trade negotiations with the US remain fluid, so any shift could relieve or worsen pressures on Canadian businesses and households.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.