Canada's economy bounced back in the third quarter of 2025, posting 2.6% growth year-on-year after contracting in the second quarter, helped in part by stronger trade numbers, official figures showed today.
US President Donald Trump's trade war has dampened Canadian growth and clouded the country's trade outlook.
The Canadian economy contracted by 1.8% in the second quarter of this year, and analysts broadly expected a modest 0.5% growth figure for the third quarter.
The 2.6% growth figure reported by Statistics Canada today "was well above the consensus forecast," CIBC economist Katherine Judge said in a note.
Statistics Canada said an improved trade balance and government spending were the main factors.
"Imports dropped and exports edged up. Increased capital investment was driven by government capital spending, as business investment was flat," the agency said.
The drop in imports was the largest since 2022, Statistics Canada said.
On government spending, the data highlighted an 82% increase on weapons systems.
Since taking office in March, Prime Minister Mark Carney has made upgrading Canada's ageing military hardware a central policy.
He says huge investments are needed for Canada to meet mandated NATO spending targets and to safeguard the country's sovereignty in a time of rising threats, including from Russia in the Arctic.
