Canada’s economic momentum reversed at the end of 2025, with annualized GDP shrinking by 0.6% in the fourth quarter, down sharply from 2.4% growth in the third quarter of 2025. The latest figures, updated on 27 February 2026, signal a clear loss of steam in the country’s expansion.
On a quarter-over-quarter basis, the current reading reflects a contraction compared with the prior quarter’s performance. While the third quarter’s 2.4% annualized increase represented growth relative to the quarter before it, the fourth quarter result marks a downturn when compared to that earlier strength, underscoring a notable shift in the short-term trajectory of Canada’s economy.
The move from solid positive growth to a mild contraction over consecutive quarters will likely sharpen focus on the underlying drivers of weakness and the potential need for policy responses. Investors and policymakers will be watching upcoming data closely to determine whether this negative print is a temporary setback or the start of a more prolonged slowdown.
