Analysts had expected real gross domestic product (GDP) for the quarter to grow by 0.5 per cent on an annualized basis \u2014 the same as the Bank of Canada\u2019s projection for the quarter. (Photo by Shawn Goldberg\/SOPA Images\/LightRocket via Getty Images) \u00b7 SOPA Images via Getty Images <\/p>\n
Canada\u2019s economy grew 2.6 per cent at an annualized rate in the third quarter of 2025, blowing past estimates, according to Statistics Canada data released on Friday. Analysts had expected real gross domestic product (GDP) for the quarter to grow by 0.5 per cent annualized, according to consensus estimates published by CIBC. That matched the Bank of Canada\u2019s (BoC’s) projection for the quarter<\/a> in its October Monetary Policy Report.<\/p>\n Yet, some economists had warned that projection, along with the central bank’s estimates for the fourth quarter, seemed overly optimistic<\/a>.<\/p>\n The stronger-than-expected figures were a result of the trade balance improving, with exports “edging up” while imports saw their largest decline since 2022, Statistics Canada reported. Capital investment increased due to government spending, while business investment remained stagnant.<\/p>\n Economists have noted, however, that export data relies on U.S. figures that were held up by the government shutdown, and thus could be revised later.<\/p>\n Real GDP increased 0.2 per cent in September from the previous month, in line with expectations. Goods-producing industries were the key driver, up 0.6 per cent, with the manufacturing sector expanding by 1.6 per cent on the month.<\/p>\n The flash estimate for October, Statistics Canada\u2019s projection based on preliminary data, came in at a contraction of 0.3 per cent.<\/p>\n In a note to clients last Friday, CIBC economist Andrew Grantham wrote that tariffs<\/a> and economic uncertainty<\/a> were likely to keep a lid on growth for \u201ca few quarters yet.\u201d<\/p>\n \u201cPast interest rate cuts should support consumer spending and housing, but with rates only just below a neutral level, growth in those areas may be patchy and not particularly strong,\u201d Grantham had said. \u201cWe continue to forecast no more rate cuts from the Bank of Canada, but also no need to hike rates until well into 2027.\u201d<\/p>\n The economy shrank 1.6 per cent in the second quarter of 2025<\/a>, with U.S. trade policy slowing exports and business investment.<\/p>\n This story will be updated.<\/p>\n John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf<\/a>.<\/p>\n Download the Yahoo Finance app, available for Apple<\/a> and Android<\/a>.<\/p>\n