Canada’s economy shrunk in the last quarter of 2025: StatCan
Global News
The economy swung back and forth between gains and losses every quarter last year as sharp changes in exports tied to U.S. tariffs drove volatility in GDP data.
Statistics Canada says the economy capped off a volatile year with a contraction in the final quarter of 2025.
The agency said Friday that real gross domestic product declined 0.6 per cent on an annualized basis in the fourth quarter, falling short of expectations from the Bank of Canada and most economists for flat growth. Real GDP per capita was unchanged in the fourth quarter.
StatCan said the main reason for the contraction was businesses drawing down their inventories — in other words, selling off goods or materials that weren’t reproduced in the quarter.
The economy swung back and forth between gains and losses every quarter last year as sharp changes in exports tied to U.S. tariffs drove volatility in GDP data.
Last quarter’s contraction came after real GDP growth of 2.4 per cent in the third quarter, which StatCan revised down slightly from initial estimates.
The economy also shrank in the second quarter as tariffs took full effect in the economy, but StatCan also revised that decline to 0.9 per cent from previous estimates of a steeper 1.8 per cent contraction.
The agency said real GDP rose 1.7 per cent in 2025 overall, cooling from two per cent growth in each of the previous two years and marking the slowest pace of annual growth since 2016 outside the COVID-19 pandemic.
“Lower exports, particularly to the United States, were the main contributor to the slower rise in GDP in 2025,” StatCan said in its report.
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