Canada Economy Poised for Strong Q2 Rebound Despite Trade Risks

Canada's economy is on track for a strong rebound in the second quarter of 2026, despite lingering trade risks. RBC Economics projects that GDP growth will exceed 3% annually, a sharp reversal from the soft patch seen during winter months.

The analysis by RBC Economics economists Nathan Janzen and Abbey Xu notes that net exports made a significant positive contribution to the economy in Q2, with auto sector output recovering after production disruptions earlier in the year. Consumer spending also picked up, despite higher fuel costs, according to RBC's cardholder transaction data.

Residential investment appears to have recovered as well, alongside improving home resales and housing starts. However, Janzen and Xu caution that housing activity remains soft and a gradual recovery is still the base case for mortgage professionals tracking Canadian homebuying demand.

The upcoming GDP release on August 29 will be closely watched by Canada's mortgage and lending industry, with a strong result expected to reinforce consumer confidence.