Canada's Economy Sees Slowest Growth Since 2020
The primary culprit behind the slowdown was a retreat in exports, most notably to the United States, the national statistical agency said. Total exports contracted by 1.7 percent over the year, with a particularly steep drop in U.S.-bound shipments during the second quarter offsetting partial recoveries recorded later in the year.
On the inventory front, 2025 brought the first annual contraction in non-farm inventories since the COVID-19 pandemic in 2020. Farm inventories, however, bucked the trend, rising for the first time in three years on the back of robust crop production.
Consumer spending offered a measure of resilience, with household final consumption expenditure climbing 2.3 percent — broadly in line with the growth rates seen over the prior two years. Total capital investment edged up 1.4 percent, buoyed largely by government outlays, including a striking 45.9 percent surge in weapons systems investment.
Across the broader industrial landscape, 16 of 20 sectors posted growth, with the finance and insurance industry and oil and gas extraction emerging as the standout contributors to expansion.
The manufacturing sector, however, bore the heaviest burden, finishing the year as the weakest-performing segment of the economy. Statistics Canada directly attributed its underperformance to the damaging weight of U.S. tariffs on Canadian goods.
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