Canada's economy shrank much more than expected in the second quarter as U.S. tariffs squeezed exports, but higher household and government spending softened the blow somewhat, Statistics Canada said on Friday.

The GDP for the quarter that ended June 30 slowed by 1.6 per cent on an annualized basis, while first-quarter growth was downwardly revised to two per cent, the data agency said.

The latest figures show that Canada's economy grew at an annualized rate of 0.4 per cent in the first six months of the year. The second quarter contraction was the first quarterly slowdown in seven quarters.

A larger-than-expected slowdown in growth could boost chances of an interest rate cut by the Bank of Canada in September. The central bank has kept rates steady at 2.75 per cent at its last three me

See Full Page