Question Period Note: Third quarter 2025 Canadian Economic Accounts and September 2025 Gross Domestic Product

• Real gross domestic product (GDP) grew 2.6% (annual rates) in the third quarter of 2025, more than reversing the 1.8% decline in the second quarter (revised down from -1.6%). This was well above market expectations of 0.5% (Bloomberg median).
• Combined with a gain in GDP inflation of 3.2%, this drove nominal GDP 5.9% higher. Sentence redacted.

• Today’s GDP report shows that Canada’s economy grew 2.6% over the third quarter.
• The 2.6 per cent gain in real GDP was well above market expectations (0.5 per cent, Bloomberg median) and the Bank of Canada’s latest forecast (0.5 per cent)
• Among G7 economies to have released their third quarter growth figures, Canada ranked 1st.
• Ongoing trade uncertainty and tariff pressures continue to weigh on the Canadian economy.
• Early estimates indicate that real GDP edged down in October, signaling that growth will likely slow in the fourth quarter.
• Budget 2025 presents a clear plan to spend less and invest more through generational investments to build Canada’s economy to be the strongest in the G7 and deliver better-paying jobs.

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• Bottom Line: The economy grew at a solid pace in the third quarter, driven by a large contribution from net trade. The 2.6 per cent gain was significantly higher than the Budget 2025 private sector survey (+0.2 per cent) and the forecast in the Bank of Canada October Monetary Policy Report (+0.5 per cent). While headline growth was stronger than expected, the details were not as positive, showing a slowdown in household demand and continued impact from trade uncertainty on business investment.
• Per Capita: Real GDP per capita grew 2.1 per cent in the third quarter, more than offsetting the decline recorded in the second quarter and putting growth over the last year at 1.4 per cent.
• G7 Growth Comparison: Among G7 economies, Canada ranked 1st on both a quarterly and year-over-year basis in the third quarter, though the U.S. third quarter release has been delayed (data point to U.S. growth being near 3 per cent in Q3).
• Key Elements of the Quarterly Report: Growth was driven by net exports, reflecting a large decline in imports as domestic demand eased (-0.1 per cent from 3.5 per cent last quarter), while exports stabilized. Uncertainty continues to affect businesses and delay investment decisions. Households also pulled back as consumption fell 0.4 per cent in the quarter, driven by a decline in purchases of motor vehicles while service consumption continued to expand. Meanwhile, residential investment grew 6.7 per cent on increased resale activities. Business investment declined 4.1 per cent, driven by continued weakness in machinery and equipment. Businesses also accumulated inventories at a slower pace than in the second quarter, which subtracted 0.6 percentage point from headline growth. Meanwhile, government spending was relatively flat, with a large gain in investment offsetting a decline in current expenditures. On the income side, corporate profits rebounded strongly, while household disposable income remained solid.
• Key Elements of the Monthly Report: Real GDP at basic prices increased by 0.2 per cent in September, slightly above the preliminary estimate of 0.1%. For the third quarter, real GDP at basic prices grew 1.9 per cent at annualized rates. Overall growth was driven by the manufacturing sector. Based on the preliminary estimate, real GDP is expected to have declined by 0.3 per cent in October, which would put growth for the fourth quarter at -0.7% assuming no change for the remaining months of the quarter.
• Outlook: We expect the volatility that drove gains in the third quarter to partially unwind, driving down growth in the fourth quarter. However, volatility in trade and inventories is likely to continue as the economy adjusts to new U.S. tariffs and uncertainty. Nevertheless, business investment and consumption are expected to recover somewhat from the third quarter decline.
• Revisions: This report also substantially revised GDP data over the past three years. The level of real GDP is now 1.7 per cent higher than before revisions, with higher investment and exports over history driving the changes.