Story perspectives

Canada's Economy Shrinks 0.6% Amid Trade Uncertainties

2/27/2026

Summary

Story summary

The Canadian economy contracted 0.6% annualized in the fourth quarter of 2025, according to Statistics Canada, due to a sharp decline in business inventories.
The decline was partly offset by household spending, exports, and government capital spending.
Economists expected a smaller decline of 0.2%.
Real GDP grew 1.7% in 2025, the slowest since 2020.
Experts say trade uncertainties will challenge the economy, while domestic demand and defense investment show resilience.

1 of 1

Story summary

The Canadian economy contracted 0.6% annualized in the fourth quarter of 2025, according to Statistics Canada, due to a sharp decline in business inventories.
The decline was partly offset by household spending, exports, and government capital spending.
Economists expected a smaller decline of 0.2%.
Real GDP grew 1.7% in 2025, the slowest since 2020.
Experts say trade uncertainties will challenge the economy, while domestic demand and defense investment show resilience.