Canada economic output grows in 2025 as household spending supports provincial gains

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Canada economic growth 2025

Highlights

Canada's GDP grows 1.9% in 2025, up in all provinces except Northwest Territories which declines by 1.7%, with the fastest rise in Newfoundland and Labrador at 4.3%.
Household spending increases 2.0% nationally in 2025, led by financial services and rent, with Prince Edward Island and Newfoundland and Labrador seeing the highest regional gains.
International exports drop 1.1% due to weaker metal and machinery shipments, while the household saving rate rises to 4.4% nationwide, with Quebec reaching 8.6%.

Provincial growth pattern in 2025

As reported by Statistics Canada, Canada’s gross domestic product rises 1.9% in 2025 after a 2.1% increase in 2024. The expansion is driven by higher household final consumption, followed by increased government final expenditure and capital investment, while lower goods exports and withdrawals of business non-farm inventories temper overall growth.

GDP rises in all provinces as well as in Yukon and Nunavut, while the Northwest Territories posts the only decline, at 1.7% lower. Among the provinces, Newfoundland and Labrador records the fastest growth at 4.3%, while Quebec posts the slowest increase at 1.0%.

Spending, investment and trade shape the outlook

Household spending rises 2.0% in 2025, the slowest growth rate since the pandemic-related decline in 2020. The increase is led by higher spending on financial services, especially investment fees, followed by rent, while spending on education and expenditures abroad falls as travel by Canadians to the U.S. slows.

By region, household spending increases fastest in Prince Edward Island, at 3.5%, and in Newfoundland and Labrador, at 3.3%, while it falls 0.6% in the Northwest Territories. Capital spending rises 1.6% after a 0.3% increase the previous year, led by government investment in engineering structures and non-residential buildings.

Real government final consumption expenditure increases 2.5% in 2025, slowing from 3.8% in 2024, with growth led by higher intermediate consumption in local municipalities and provincial and territorial health and social services. International exports fall 1.1%, mainly because of weaker shipments of intermediate metal products and industrial machinery and equipment, with Nunavut and the Northwest Territories reporting the largest declines.

Nationally, the household saving rate reaches 4.4% in 2025, up from 3.7% a year earlier, as disposable income grows faster than nominal household spending. Quebec and Alberta post the highest provincial saving rates, at 8.6% and 8.0%, respectively.

Mario Draghi’s warning on the risks of restrictive monetary policy highlighted how keeping interest rates above growth can worsen debt dynamics and, if pushed too far, undermine the investment needed for long-term resilience. Our publication previously noted that central banks face a trade-off: they must control inflation while avoiding an unnecessarily high rate path that raises the cost of capital, slows productivity-enhancing investment, and weakens potential output.

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