US EditionCanada’s Q4 GDP contracts on annualized basis, full-year growth at 1.7%
Businesses reduced inventories by C$23.46 billion in Q4, causing a 0.6% GDP contraction despite 1.7% growth for all of 2025, Statistics Canada reported.
- On Feb. 27, 2026, Statistics Canada reported Canada’s real GDP contracted 0.6% annualized in the fourth quarter of 2025, with full-year growth at 1.7%, the slowest since 2020.
- Businesses drew down inventories, with firms withdrawing C$23.46 billion at an annualized pace while shipments to the United States did not fully recover, weighing on exports.
- Manufacturing briefly rebounded, with real GDP up 0.2% in December as the manufacturing sector rebounded, while households spending rose 0.4% and capital investment grew 0.8%, aided by federal government weapons spending.
- The result surprised forecasters, as analysts and polls had predicted flat Q4 growth, while Statistics Canada’s advance estimates show GDP likely stalled in January and cautioned the Q4 figure could be revised.
- Tariff-Driven trade swings meant the economy fluctuated last year as sharp export changes tied to U.S. tariffs drove volatility, prompting firms to first add then draw down inventories, leaving growth weakest since the 2020 decline.
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Canadian ends volatile 2025 with a contraction in Q4: StatCan
OTTAWA — Statistics Canada reported a fourth-quarter contraction in real gross domestic product Friday that economists argue conceals some promising details in underlying economic data. StatiCan said Friday that real GDP declined 0.
Canada's GDP contracted by 0.6% in the fourth quarter of 2025, while its year-over-year growth remained in the green.
According to the federal agency, the decrease in corporate inventories is a concern.
Canada's economy contracted unexpectedly in fourth quarter of 2025
Gross domestic product contracted at an annualized pace of 0.6 per cent in the quarter running from October to December, Statistics Canada said. The country's overall growth for 2025 was 1.7 per cent — in line with Bank of Canada expectations, but the slowest pace of annual growth since the decline in 2020.
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