## Canada's Economic Growth Surprises Analysts
Canada’s economy expanded at an annualized rate of 2.6 percent in the third quarter of 2025, according to data released by Statistics Canada on Friday. The stronger-than-expected performance helped the country avoid slipping into a technical recession, which is typically defined as two consecutive quarters of negative economic growth.
### Growth Driven by Exports and Consumer Spending
The economic rebound was largely supported by a rise in exports and a modest increase in consumer spending. Goods exports increased notably, backed by energy and manufacturing sectors, while service exports continued to perform steadily. Household consumption inched higher, showing resilience despite elevated interest rates.
> “The economy performed more robustly than many forecasters anticipated,” Statistics Canada noted, highlighting stronger business investment and a pickup in exports.
### Impact of Interest Rates and Inflation Pressures
High borrowing costs continued to weigh on certain industries, particularly housing and retail. The Bank of Canada maintained a cautious stance, keeping interest rates steady after a series of earlier hikes aimed at curbing inflation. Inflation pressures persisted but showed signs of moderation through late summer and early fall.
### Regional and Sectoral Performance
Growth was uneven across provinces. Resource-based economies in the West benefited from commodity price gains, while central provinces reported stable growth in manufacturing and services. In contrast, housing markets in major cities like Toronto and Vancouver remained subdued due to affordability challenges.
### Economic Outlook
Economists suggest the better-than-expected third-quarter results could improve consumer and business confidence heading into 2026. However, they warn that sustained high interest rates and global uncertainty may limit future momentum.
> “Avoiding a recession is good news, but the road ahead remains challenging,” said TD Bank economist Leslie Preston.
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*Author’s summary: Canada’s economy grew 2.6% in Q3 2025, driven by exports and steady consumption, narrowly avoiding a recession despite headwinds from high interest rates.*
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CBC — 2025-11-28