Canada’s real gross domestic product per capita declined 0.4% in the second quarter of 2025, extending a troubling pattern of economic underperformance that has left living standards below 2017 levels, according to official government data released in late August.
The decline followed a modest 0.4% increase in the first quarter, highlighting Canada’s struggle to generate meaningful economic growth on a per-person basis. Overall GDP contracted 0.4% in the quarter, driven primarily by steep export declines amid ongoing trade tensions with the United States.
Statistics Canada reported that exports fell 7.5% in the second quarter, with passenger vehicle exports plummeting 24.7% as US-imposed tariffs disrupted trade flows. Business investment in machinery and equipment dropped 9.4%, marking the weakest performance since 2016 outside of the pandemic period.
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The data underscores a broader economic challenge facing Canada. Per-capita economic output has contracted in five of the past six quarters and remains 2.5% below pre-pandemic levels, according to a Statistics Canada analysis published earlier this year.
University of Waterloo economist Mikal Skuterud has noted that Canada’s current per-capita GDP levels are comparable to those seen six years ago, highlighting the country’s stagnant economic trajectory over recent years.
The persistent weakness in per-capita growth reflects Canada’s inability to keep economic output ahead of rapid population expansion. The country’s population grew 3.2% in 2023, among the fastest rates in the developed world, while economic growth has struggled to keep pace.
Historical data shows Canada’s per-capita economic output has averaged 1.1% annual growth dating back to 1981. However, recent performance has left the metric about 7% below its long-term trend, equivalent to roughly $4,200 per person in lost economic output.
The economic headwinds include trade disruptions, weak productivity growth, and reduced business investment. Federal government revenue also declined 4.2% in the quarter following the removal of the federal carbon tax, contributing to increased government borrowing.
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