Canadian economy contracted 0.6% in Q4 to cap volatile 2025: StatCan

By Canadian Press on February 27, 2026.

OTTAWA — Statistics Canada says the economy capped off a volatile year with a contraction in the final quarter of 2025.

The agency says 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.

Statistics Canada says 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.

Statistics Canada says there was some recovery in exports by the end of the year but trade failed to fully recover from the sharp decline in the second quarter when tariffs took full effect in the economy.

The agency says real GDP was up 0.2 per cent in December and rose 1.7 per cent in 2025 overall, marking the slowest pace of annual growth since 2016 outside the COVID-19 pandemic.

This report by The Canadian Press was first published Feb. 27, 2026.

Craig Lord, The Canadian Press