Reuters US Economy
By Promit Mukherjee
BANFF, Alberta (Reuters) -Bank of Canada Governor Tiff Macklem said on Thursday he expected second-quarter growth to be "quite a bit weaker" than the first quarter, and that it could be worse in subsequent quarters if the uncertainty around U.S. tariffs continued.
Macklem, who was addressing a televised press conference along with Canadian Finance Minister François-Philippe Champagne in Banff, citing the joint communique released earlier, said the uncertainty had come down to some extent but more needs to be done.
"I expect the second quarter will be quite a bit weaker," Macklem said of GDP growth, adding that his forecast for the months after the second quarter would depend on the scope and extent of tariffs.
"Canada is keen to sit down with the United States and work through our differences, come to agreement, get that clarity, (then) we can get back to growth clearly," he said.
"If things move in the other direction, it'll do worse," he said, referring to GDP growth in the subsequent quarters if tariffs continue.
The central bank last month forecast annualized first-quarter GDP would be 1.8% but did not give any other projections, citing uncertainty over U.S. tariff policy.
Statistics Canada is due to issue first-quarter GDP data on May 30. It had forecast annualized first quarter growth of 1.5%.
Macklem said he expected exports to hold up growth, given that companies had rushed to send goods to the U.S. before tariffs took effect in April, but prevailing uncertainty was hampering investments and consumption that would take a toll on the economy.
He had previously refrained from giving any outlook on the economy.
"I think the more we can get uncertainty down, the more we can be forward looking as we move forward in our monetary policy," Macklem added.
In a joint statement released by the G7 finance leaders', the countries acknowledged that economic policy uncertainty had declined from its peak, and they would work to make further progress.
U.S. President Donald Trump's tariffs have roiled financial markets and disturbed decades of global trade order. But a joint communique by the G7 leaders was hailed as progress by Champagne and Macklem.
Although the communique did not mention tariffs, Macklem said the levies were on the minds of the leaders and governors and the discussions included a focus on improving dialog around tariffs and on fixing the problems in global trading systems.
"There was a clear message in the communique that we are committed to continuing to reduce that uncertainty, and that includes around trade and tariffs," he said.
(Reporting by Promit Mukherjee and David Ljunggren; Editing by David Gregorio and Bill Berkrot)