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Economic News

Quebec: Limited Rebound for GDP in Q3

December 19, 2025
Sonny Scarfone
Principal Economist

Highlights

  • After a downward revision of real GDP in the second quarter (-2.9% annualized), Quebec’s economy posted a limited rebound of 1.0% in the third quarter (table 1). By comparison, Canada as a whole experienced a 1.8% decline followed by a stronger recovery of 2.6%.
  • The figures released today are consistent with the partial indicators observed during the quarter. Domestic demand lost momentum after outperforming expectations in the second quarter. On the government spending side, consolidation efforts—particularly at the provincial level—are reflected in the results.
  • Among the factors that contributed to growth were business investments in non-residential structures as well as those by public administrations. The latter intensified particularly in machinery and equipment, with sharp increases of 57.4% and then 23.0% over the past two quarters.
  • On the external trade front, exports lacked momentum, held back by another drop in international shipments (-2.8%, after -27.5% in the previous quarter). This weakness was partially offset by an increase in interprovincial exports (+4.2%, after +5.5%). As for imports, their decline was entirely due to reduced international purchases (-8.8%), particularly for goods (-10.4%).

Comments

It is now clearer that the economic shock linked to the trade war initiated by the United States is weighing more heavily on Quebec than on the Canadian average. Our estimates indicate that the effective average tariff applied to Quebec’s exports to the United States (5.7% as of last September) is well above that imposed on total Canadian exports (3.9%). This disparity is explained by the concentration of tariffs in sectors where Quebec has a strong presence.

 

While the overall labour market continues to show resilience, exports remain under pressure. Partial data already indicated that several of our key commodities—particularly aluminum—struggled to regain ground in the third quarter.

 

As household and government consumption declines, supports for activity are becoming scarce. The increase in interprovincial exports (and imports) provides a welcome boost, as do private investments in non-residential structures and those by public administrations. However, growth will remain modest over the coming quarters, especially as demographic External link. trends will limit potential gains throughout the forecast horizon.

Implications

The revision of the Canada–United States–Mexico Agreement (CUSMA) will remain an important source of uncertainty early in the year and may slow the pace of recovery, especially in provinces like Quebec that are more exposed to existing tariffs. This vulnerability, already highlighted by weak exports, increases the risk of a slower restart. In this context, our forecast External link. of modest 1.1% growth in 2026 remains cautious.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.