Canada's Economy Beats Forecasts with Strong Q4 Growth

Canada's economy showed stronger-than-expected growth in the fourth quarter of 2025, according to a recent report from RBC Economics. The country's real GDP expanded at an annualized pace of 2.1% during this period, surpassing both RBC's own forecast of 1.8% and the consensus estimate of 1.9% among private-sector economists.

The growth was driven by robust consumer spending, a rebound in exports, particularly in energy and agricultural products, and a second consecutive quarter of rising business investment. Business investment also contributed positively to the growth, with firms responding to improved demand and easing supply chain pressures.

RBC's report suggests that the output gap, the difference between actual and potential GDP, may have closed sooner than anticipated, reducing the need for further stimulus. This could keep borrowing costs higher for longer, affecting mortgages, business loans, and government debt servicing.