08:57 AM EDT, 05/30/2025 (MT Newswires) -- While Canada's headline gross domestic product growth was solid in Q1, it was flattered by a surge in exports as companies looked to front-run potential United States tariffs, said CIBC after Friday's data.

Domestic demand was weak during the quarter, and monthly data point towards only slight upward momentum heading into Q2, noted the bank.

Headline GDP posted a 2.2% year-over-year advance in Q1, which was modestly above the consensus forecast and the Bank of Canada's April Monetary Policy Report prediction (of 1.7% and 1.8%, respectively), although that did follow a downward revision to Q4 to 2.1% from 2.6%), stated CIBC.

However, growth during Q1 was driven by trade and inventories, probably linked to efforts front-running U.S. tariffs, and final domestic demand was only flat on the quarter. Business and residential investment were both down, while consumer spending growth slowed noticeably relative to the second half of 2024.

Monthly GDP pointed to a 0.1% month-over-month expansion in March, and advance data pointed to a similar increase in April. Mining, oil & natural gas was the primary source of growth in March. and Statistics Canada suggested it was also a contributor in April as well.

Early tracking for Q2 -- assuming flat readings for May and June -- points towards modest growth of 0.5% annualized, adde the bank. While that would be below the economy's long-run potential, suggesting that slack is building up again, it would be better than the BoC's April MPR scenarios with scenario 1, 0.0%, and scenario 2, -1.3%.