Canada’s economy shrank 1.6% in Q2, says Statistics Canada

Canada’s economic output, as measured by Gross Domestic Product (GDP) declined for the third straight month in June as manufacturing production slowed amid the ongoing trade war.

On a seasonally adjusted annualized basis, Statistics Canada says the second quarter of 2025 saw a decrease in economic output by 1.6 per cent compared to the same period a year prior.

Statistics Canada reported on Aug. 29 that GDP fell in the month of June by 0.1 per cent, which was the third consecutive decline following contractions in April and May. This also means the second quarter of 2025 saw a 0.3 per cent drop in GDP, after the first quarter of the year saw an increase of 0.5 per cent.

Two straight quarters of declines in GDP is what most economists consider to be an economic recession.

The agency also says that in June, goods-producing industries contracted by 0.5 per cent and was led by slowdowns in manufacturing and utilities, and 11 out of 20 sectors showed declines.

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With manufacturing in particular, June marked the third decline in four months so far this year. Statistics Canada notes in its monthly survey of manufacturing that two fifths of manufacturers say they are being impacted by tariffs.

This comes as trade tensions with the United States and China continue, which for months has been expected to hamper the Canadian economy, especially the manufacturing sector.

– More to come