The Canadian economy contracted for the first time in nearly two years as the trade war with the US pinched exports and business investment. Canada’s gross domestic product shrank at a 1.6% annualized pace in the second quarter, Statistics Canada reported Friday from Ottawa. That’s the biggest decline since the Covid-19 pandemic and the first contraction in nearly two years.
Web Archive: https://archive.is/Ku8H0#selection-1467.0-1575.306
Actual Statistics Canada release: https://www150.statcan.gc.ca/n1/daily-quotidien/250829/dq250829a-eng.htm
Real gross domestic product (GDP) declined 0.4% in the second quarter of 2025, following a 0.5% gain in the first quarter. The contraction in the second quarter was driven by significant declines in the export of goods, as well as decreased business investment in machinery and equipment. These declines were tempered by faster accumulations of business inventories, higher household spending and lower imports of goods.
On a per capita basis, real GDP was down 0.4% in the second quarter, after an increase of 0.4% in the previous quarter. Final domestic demand, which represents total final consumption expenditures and investment in fixed capital, was up 0.9% in the second quarter of 2025, following a decline of 0.2% in the first quarter. Increased household and government spending led the rise in final domestic demand in the second quarter.
The annualized number based on just this quarter when things have been at their worst is a bit extreme sounding. Expectations are Q3 won’t be as bad as Q2, so annualizing Q2 alone is kind of misleading, but I get why they do it.
Pretty much all sectors are up except manufacturing, which is reassuring — but obviously the ripple effects of that decline have not propagated.
Canadian Article: https://www.theglobeandmail.com/business/article-statistics-canada-gdp-second-quarter-june/
Manufacturing has a bigger multiplier effect than other sectors, so that’s not good news.
Yeah Bloomberg, I wouldn’t call that crushing. But we know you’re american business propaganda.
Exports fell 27% on an annualized basis as US tariffs on Canadian goods shattered the country’s shipments abroad
27% is pretty significant.
With trade deals with other countries set to kick in this should only be temporary.
I don’t think anyone expected Canada’s economy to be completely unaffected by Trump’s tariff tantrum.
That’s an annualized rate that assumes that the rest of the year with see a contraction and ignores the growth in Q1.
