Canada Economy Surges to 3.4% Growth in Second Quarter

The Canadian economy is showing signs of a strong rebound in the second quarter, driven by surging energy production. According to Statistics Canada's industry-based output data, real gross domestic product expanded at an annualized rate of 3.4% between April and June.

This growth rate is higher than the Bank of Canada's July monetary policy report projection of 2.5%, based on expenditure measures. The oil industry had its highest crude production volume for May since at least 2016, with extraction from the western oil sands up 12.4% from the same month last year.

Canada is enjoying strong demand due to reduced supply coming out of the Middle East as a result of the US-Iran war. The rebound suggests the economy is stabilizing after a year of stagnation brought on by US tariffs and weaker population growth.

Bank of Montreal Chief Economist Doug Porter noted that the underlying economy is 'grinding ahead' with GDP up 1.7% from year-ago levels, just shy of its 20-year average growth rate. However, some Bank of Canada officials are concerned about the sustainability of a rebound.