Canada’s economy rebounded sharply in the second quarter after six months of virtually no growth, aided by a strong jump in exports and solid domestic demand, data showed yesterday, though a new round of US tariffs brings new uncertainty. The economy grew at an annualised rate of 3.3 per cent in the second quarter, the fastest rate since 2023, after a revised 0.3pc increase in the first quarter, Statistics Canada said.
The upward revision to first-quarter growth means Canada was not in a technical recession, usually defined as two straight quarters of contraction.
Healthy domestic demand, led by consumer spending and business investments, signals the economy is slowly brushing off the impacts of more than 18 months of US import tariffs that upended North American supply chains and increased costs.
A strong domestic consumption and expenditure pattern puts Canada on a firm footing to withstand a new 50pc US import tariff that President Donald Trump imposed this week on $20bn of Canadian exports.
Canada retaliated with its own counter-measures on Canadian imports from the US. “It seems like households and businesses were beginning to find ways of navigating the trade-related uncertainty before the latest round of tariffs.” said Royce Mendes, managing director and head of macro strategy at Desjardins wrote in a note.
“While it helps that the economy was on stronger footing heading into August, the fresh wave of protectionism injects a significant amount of uncertainty into the outlook,” Mendes said.
The Canadian dollar slightly weakened after the GDP data with loonie trading down 0.01pc to C$1.3856 against the US dollar, or 72.17 US cents. Money markets were pricing in no change in interest rates next week. Yields on 2-year government bonds firmed after the data and were up 1.3 basis points to 2.601pc.
On a quarterly basis, GDP grew at 0.8pc for the period ended June, from an upwardly revised 0.1pc in the previous quarter.
Second-quarter annualized growth was higher than the Bank of Canada’s July forecast of 2.5pc growth.
&uuid=(email))