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Economic News

Quebec Quarterly GDP: Households Tighten Their Belts While International Trade Picks Up the Slack

June 26, 2025
Sonny Scarfone
Principal Economist

Highlights

  • The Quebec economy picked up pace in the first quarter of 2025, with annualized real GDP growth accelerating from 1.3% to 2.1%.
  • Domestic demand stagnated (+0.1%), weighed down by a decline in household consumption (-2.4%)—the steepest drop since the pandemic—and a reduction in general government spending (see Table 1).
  • International trade was a key driver of growth, bolstered by a 9.4% increase in exports as firms expedited deliveries in anticipation of tariffs that were then expected to take effect in April.

Comments

Quebec’s economy gained momentum in the first quarter, a period shaped by significant trade developments. Real GDP grew at an annualized rate of 2.1%.

Domestic demand, however, stagnated in the first quarter, as households adopted a more cautious stance amid rising uncertainty. Household consumption declined by 2.4%, largely due to a sharp drop in durable goods purchases (-17.8%), partly reflecting the withdrawal of incentives for electric vehicle purchases.

Public administrations exerted downward pressure on growth, both through reduced consumption and lower capital spending. In the medium term, public consumption by the Quebec government is expected to continue weighing on economic activity External link., in a context of fiscal tightening aimed at restoring a balanced budget by 2029–2030. Bringing forward certain investment projects could mitigate this limited contribution to growth.

Business investment rose by 10.8%, fuelled by sustained growth in residential construction, building on an already buoyant end to 2024. Spending on machinery and equipment also gained momentum, reflecting expectations of rising prices amid growing US protectionism and anticipated Canadian retaliatory measures.

Unsurprisingly, international trade underpinned growth, with exports outpacing imports. This trend reflects firms’ efforts to get ahead of new tariff barriers—both by accelerating outbound shipments and by stockpiling inputs. Consistent with this dynamic, goods-producing industries led GDP growth in the first quarter, posting a 7.6% gain compared to just 0.4% for services.

Implications

Quebec’s economy expanded in line with expectations. Since the reference period, several indicators have continued to show resilience, particularly the labour market and the real estate sector, which remains among the most buoyant in the country. However, because of the sectoral distribution of tariffs, whether implemented, in effect to a limited extent, or merely proposed, the province is likely to experience a greater impact than the national average, with two slightly negative quarters projected in 2025 (see Graph 1 and our latest forecasts External link.).

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.