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2025-26 ACOA Departmental Results Report – Operational Context

Global and domestic conditions remained uncertain throughout 2025, driven by geopolitical and trade tensions. At the regional level, provincial governments faced significant budgetary pressures. Projected deficits for 2025–26 were revised sharply upward across the Atlantic provinces,^{Footnote 1} reflecting, in part, rising health-care expenditures and financial assistance measures introduced to offset the impacts of U.S. tariffs and the resulting uncertainty.

The regional economy was characterized by moderate growth, ongoing trade uncertainty, demographic change, and persistent affordability and productivity challenges. Following growth of 2.9% in 2024, Atlantic Canada’s real gross domestic product increased by 2.5% in 2025, exceeding the national growth rate by 1.6%. Economic performance was driven primarily by oil and gas extraction, health care, construction, and real estate and rental and leasing services. All Atlantic provinces recorded economic growth in 2025, with Newfoundland and Labrador (+3.5%) posting the strongest growth rate among all Canadian provinces.^{Footnote 2}

Atlantic Canada exported $38.9 billion in goods in 2025, a decline of 3.5% from 2024, compared with a slight national decline of 0.2%. Lower exports from the energy, mining, and forestry sectors more than offset gains in other industries. While the United States remained the region’s largest export market, its share of Atlantic Canada’s exports fell from 72.5% in 2024 to 66.6% in 2025. At the same time, exports to markets outside the United States increased by 17.1%. Exports to the European Union rose 44.0% to $6.9 billion, while exports to China declined for a fourth consecutive year.^{Footnote 3}

The manufacturing sector also reflected the effects of trade uncertainty and weaker demand. After rising by 5.3% in 2024, annual manufacturing sales in Atlantic Canada declined by 2.9% in 2025 to $44.2 billion.^{Footnote 4}

Despite these challenges, businesses across the region demonstrated resilience. The number of active businesses in Atlantic Canada and Canada changed little from month to month in 2025, with average monthly growth remaining close to zero.^{Footnote 5} According to the Canadian Survey on Business Conditions, for the first quarter of 2026, 72.5% of businesses in Atlantic Canada reported revenues in 2025 that were equal to or higher than those in 2024, compared with 68.8% nationally.^{Footnote 6}

Although growth slowed compared with the previous year, labour market conditions remained positive. Employment in Atlantic Canada increased by 8,200 jobs, or 0.7%, in 2025, following stronger growth of 3.1% in 2024.^{Footnote 7} The regional unemployment rate rose slightly, increasing by 0.1 percentage points to 7.6%, but remained well below its pre-pandemic level of 8.8%.^{Footnote 8} The largest employment gains were recorded in health care and social assistance and manufacturing, while accommodation and food services experienced the steepest decline.^{Footnote 9}

Atlantic Canada recorded a 1.2% increase in industry productivity, reaching $53.90 per hour in 2025 compared with 2024, marking the first increase following four consecutive years of declines.^{Footnote 10} For comparison, national industrial productivity increased by 1.4% in 2025. Despite this strong regional performance, industrial productivity remained below its pre-pandemic level of $55.03 per hour, recorded in 2019. Moreover, the gap relative to the Canadian average widened, increasing from 11.3% in 2019 to 16.2% in 2025.

Demographic trends also shifted in 2025. As of January 1, 2026, Atlantic Canada’s population stood at nearly 2.7 million, representing growth of just 0.1% compared with January 1, 2025. This was the region’s slowest rate of population growth since 2015. While Atlantic Canada continued to record positive interprovincial net migration, the number fell by 58.1% compared with 2024.^{Footnote 11} Since natural increase has remained negative since 2013, population growth continues to rely on interprovincial and international migration, both permanent and temporary. International migration declined significantly in 2025 following reductions to immigration targets.^{Footnote 12} Permanent resident admissions in Atlantic Canada – at 27,410 – fell by 30.6% in 2025, reaching their lowest level since 2021. Admissions of temporary foreign workers and international students also decreased.

Consumer-oriented industries benefited from easing inflation and continued growth in spending. Retail sales in Atlantic Canada increased by 3.5% in 2025 to reach $57.4 billion, with gains recorded in all four Atlantic provinces.^{Footnote 13} Inflation continued to slow, with Canada’s annual average Consumer Price Index rising by 2.1% in 2025, down from 2.4% in 2024. Inflation rates in Newfoundland and Labrador, Prince Edward Island and New Brunswick remained below the national average.^{Footnote 14}

Housing and construction continued to be key drivers of regional growth despite ongoing affordability pressures. The value of building construction investment in Atlantic Canada increased by 11.0% in 2025 to $14.6 billion, supported by both residential and non-residential construction.^{Footnote 15} Housing sales in Atlantic Canada increased by 3.3% in 2025, contrasting with a national decline of 2.4%.^{Footnote 16} Housing starts increased by 22.3% in the region, surpassing the national growth rate of 5.6%, with gains concentrated in the Maritime provinces.^{Footnote 17} However, vacancy rates for rental housing remained below the national average of 3.1%, ranging from 2.1% in Prince Edward Island and Newfoundland and Labrador to 2.9% in New Brunswick.^{Footnote 18}

Against this backdrop, ACOA continued to play a critical role in supporting businesses and communities as they navigated uncertainty, strengthened competitiveness, diversified export markets, adopted new technologies, and pursued inclusive and sustainable growth. The Agency’s priorities responded directly to the region’s key challenges, including slowing population growth, trade disruptions, budgetary pressures and increasing demand for housing.