FX.co ★ Canada’s Economy Slips into Contraction as Q4 2025 GDP Falls 0.2% QoQ

Canada’s economic momentum reversed at the end of 2025, with gross domestic product (GDP) declining by 0.2% quarter-over-quarter in the fourth quarter, according to data updated on 27 February 2026. This marks a notable downturn from the 0.6% quarter-on-quarter expansion recorded in the third quarter of 2025.

The latest figures indicate that the Canadian economy moved from moderate growth into contraction within a single quarter. On a quarter-over-quarter basis, the “actual” result for Q4 2025 is measured against Q3 2025, while the “previous” figure for Q3 2025 reflects the change compared with the second quarter of 2025.

The shift from 0.6% growth to a 0.2% decline suggests a weakening economic backdrop heading into 2026, raising questions about underlying demand and the resilience of Canada’s recovery path. Policymakers and market participants are likely to scrutinize upcoming data for signs of whether this contraction is temporary or the start of a more prolonged slowdown.