POLITICS

Stalling Growth: Canada’s Economy Shrinks at End of 2025 as Rate Cut Pressure Mounts

Canada’s GDP shrank at the end of 2025 as businesses cut inventories. Discover how this impacts the Bank of Canada’s rate cut timeline and 2026 growth.

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5 months ago

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The 2025 Economic Cold Snap

The Canadian economy experienced a sharper-than-expected cooling at the end of 2025, leaving policymakers and investors scrambling to recalibrate their expectations for the coming year. Data released today reveals that the national Gross Domestic Product (GDP) contracted during the final quarter, a move largely attributed to a significant reduction in business inventories. This trend of “destocking”—where companies sell off existing goods rather than producing or importing new ones—acted as a significant drag on economic output, offsetting gains in other sectors.

Understanding the Inventory Impact

Economists point to the inventory drawdown as a sign of business caution. After several years of supply chain volatility, many firms had built up substantial cushions of stock. As consumer demand softened throughout the latter half of 2025, businesses prioritized clearing these backlogs to improve cash flow and reduce carrying costs in a high-interest-rate environment. While this process is technically a subtraction from GDP, some analysts view it as a necessary correction that sets the stage for future growth when restocking eventually resumes. However, the immediate impact has been a cooling of the headline growth figures that far exceeded analysts’ initial fears.

The Bank of Canada’s Policy Dilemma

The latest figures place the Bank of Canada (BoC) in a delicate position. For months, the central bank has maintained a holding pattern, waiting for clear evidence that inflation is sustainably returning to its two percent target. However, the current growth trajectory for the first quarter of 2026 is trending at approximately 1.0 percent, significantly underperforming the BoC’s own forecast of 1.8 percent. This underperformance suggests that the economy is cooling more rapidly than anticipated, potentially opening the door for rate cuts sooner than the mid-2026 consensus previously held by many market participants.

Expert Perspectives on Growth and Rates

Andrew Grantham, a senior economist at CIBC, noted that while today’s data might not be enough to move the central bank immediately, the outlook is shifting. Grantham highlighted that any negative trends in the job market, which has so far remained relatively resilient, would be the likely catalyst for a change in the BoC’s thinking. Similarly, Douglas Porter, chief economist at BMO, described the current growth as “mild” at best, suggesting that while the door to rate cuts is “slightly ajar,” the central bank is not quite ready to walk through it just yet. The cautious tone from the BoC reflects a fear of cutting too early and reigniting inflationary pressures, particularly in the housing market.

Silver Linings in the Revision Data

Despite the weak finish to 2025, the report offered some positive news in the form of historical revisions. The GDP figures for the second quarter of 2025 were revised from a -1.8 percent contraction to a much shallower -0.9 percent. Dominique Lapointe, director of macro strategy at Manulife Investment Management, pointed out that these revisions mean the economy was actually on firmer footing heading into the second half of the year than previously understood. This revision effectively aligns the total size of the Canadian economy by year-end with earlier, more optimistic forecasts, despite the fourth-quarter stumble.

A Cautious Outlook for 2026

As Canadians look toward the remainder of 2026, the economic narrative remains one of caution. Consumers, squeezed by the lingering effects of high debt-servicing costs, have pulled back on discretionary spending. This was evident in the third-quarter data, which was also revised downward to 2.4 percent annualized growth from 2.6 percent. Economists described that period as a “mixed bag,” where growth was artificially supported by a drop in imports rather than a surge in domestic productivity. For the average Canadian household, the primary concern remains whether the current slowdown will translate into broader job losses or if the economy can achieve the elusive soft landing that the Bank of Canada has been aiming for.

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nation

Mayor Olivia Chow Targets Big Tech Pricing Tactics at Toronto Grocery Stores

Toronto Mayor Olivia Chow proposes a ban on ‘surveillance pricing’ at grocery stores to protect residents from data-driven price gouging and rising food costs.

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10 hours ago

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July 21, 2026

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Toronto Moves to Ban Data-Driven Price Gouging

Toronto Mayor Olivia Chow is launching a fresh offensive against rising food costs by proposing a ban on what she terms “surveillance pricing” at local grocery stores. Alongside Councillor Alejandra Bravo, the Mayor intends to introduce a motion at Tuesday’s Executive Committee meeting aimed at preventing retailers from utilizing customers’ personal data to fluctuate prices for essential goods. The move seeks to curb unfair price gouging that potentially targets individuals based on their digital footprint and purchasing power.

The Fight for Fair Grocery Costs

As inflationary pressures continue to squeeze household budgets, Mayor Chow emphasized that the municipal government must act as a shield for its residents. “Torontonians are struggling with rising costs and making difficult choices at the grocery store,” Chow stated in a press release. She argued that large retailers should not be permitted to exploit personal information to inflate prices, characterizing the practice as an “emerging grocery rip-off” that requires immediate intervention before it becomes industry standard.

Municipal Action vs. Provincial Resistance

Toronto’s initiative mirrors recent legislative steps taken in Manitoba, where the provincial government introduced measures to combat “predatory pricing.” However, the proposal faces a significant political divide within Ontario. Premier Doug Ford has explicitly voiced his opposition to such bans, arguing that government price regulation interferes with the principles of a free-market economy. Ford has previously dismissed the idea of price oversight as “socialism,” maintaining that competition remains the most effective tool for lowering costs for consumers.

Utilizing Every Municipal Tool

Despite provincial pushback, Councillor Alejandra Bravo remains committed to the city’s strategy. Bravo highlighted that the city is exploring every available regulatory tool to ensure economic fairness for working-class citizens, arguing that internet search histories and personal data should not dictate the cost of bread and milk. This motion joins other recent city-led affordability efforts, such as the freezing of TTC fares and the expansion of school food programs, as Toronto attempts to navigate a complex cost-of-living crisis.

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energy

Canada Offered to Double Oil Exports to U.S. in Failed Trade Negotiations, Hoekstra Reveals

U.S. Ambassador Pete Hoekstra reveals PM Mark Carney offered to double Canadian oil exports to the U.S. in a failed bid to end Donald Trump’s trade tariffs.

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1 day ago

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July 21, 2026

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The High-Stakes Oil Gambit at the White House

In a dramatic revelation regarding the strained trade relations between North American neighbors, U.S. Ambassador to Canada Pete Hoekstra disclosed that Prime Minister Mark Carney offered to double Canadian oil exports to the United States last year. The proposal was presented as a strategic bargaining chip during an October 7, 2025, meeting at the White House, aimed at persuading President Donald Trump to roll back aggressive tariffs on Canadian steel, aluminum, and automotive products.

Internal Tensions and Negotiating Tactics

Speaking at a conference in Edmonton, Hoekstra detailed how the offer to supply an additional three to four million barrels of oil per day nearly caused a rift within the Trump administration. According to the Ambassador, Interior Secretary Doug Burgum and Energy Secretary Chris Wright were so enthusiastic about the proposal that President Trump had to physically restrain them. Hoekstra noted that the President cautioned his cabinet against “crawling across the table” to seal the deal, suggesting that such eagerness would undermine the United States’ negotiating leverage.

The Collapse of the Trade Deal

Despite the massive scale of the energy offer, which would have significantly deepened the integration of the North American energy market, the negotiations ultimately collapsed. President Trump reportedly walked away from the bargaining table later that month, citing an anti-tariff advertisement campaign launched by the Ontario government as a primary reason for the breakdown. While Canada remains the largest supplier of crude oil to the U.S., accounting for nearly two-thirds of imports, the trade deficit remains a point of contention for the Trump administration.

A Future for Cross-Border Pipelines

Despite the failure of the broader trade deal, Hoekstra expressed optimism regarding infrastructure projects like the proposed cross-border connection between South Bow and Bridger Pipeline LLC. This project, which received a presidential permit in April, could eventually facilitate the transport of 550,000 barrels of oil per day. While formal trade talks resumed this spring, progress remains stagnant, leaving the future of Canada’s industrial exports and energy expansion in a state of political uncertainty.

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Ontario

Former Tourism Minister Stan Cho Under Fire for $100,000 in Riding Association Expenses

Ontario MPP Stan Cho faces new allegations over $100,000 in riding association expenses for food and travel following his resignation as Tourism Minister.

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1 day ago

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July 21, 2026

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The Fallout Continues for Stan Cho

Ontario PC MPP Stan Cho is facing a new wave of scrutiny just days after his resignation from Premier Doug Ford’s cabinet. Newly surfaced reports indicate that the Willowdale MPP billed nearly $100,000 in food and beverage expenses to his riding association over a three-year period. This discovery follows Cho’s departure as Tourism Minister after it was revealed he spent more than $16,000 on Toronto hotel rooms despite living only kilometers away from the legislature.

A Pattern of Questionable Spending

According to data reported by Global News, a significant portion of Cho’s dining expenses occurred outside his Willowdale riding, often in the downtown core. Between 2023 and 2025, the riding association also covered thousands of dollars in flights and hotel stays. These expenditures have raised eyebrows among political analysts, as riding associations—which are funded by both private donations and taxpayer-funded per-vote subsidies—typically focus on local constituency work rather than travel and high-end dining for the representative.

Systemic Issues within the PC Caucus

The controversy surrounding Cho is not an isolated incident. Premier Doug Ford has ordered 19 other PC MPPs from the Greater Toronto Area to pay back approximately $120,000 in combined hotel expenses. While Ford called the spending “totally unacceptable,” he has resisted calls for further resignations, maintaining that Cho “did the right thing” by stepping down from his ministerial post voluntarily. The provincial government has since announced plans to eliminate the “special circumstances” loophole that allowed MPPs to bill for local accommodation during late-night sessions.

Political Implications and Public Trust

This latest spending scandal arrives at a difficult time for the Ford government, which recently faced backlash over the $28.9-million purchase of a private jet. Opposition parties are currently demanding full transparency, asking for a detailed breakdown of all expenses before agreeing to legislative changes. For Cho, who admitted in his resignation letter that he failed to consider how his choices would look to a constituent “working a double shift,” the nearly $100,000 in food bills may prove even more damaging to his reputation as a public servant.

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