Canada Economy Rebounds Sharply in Q2, Exports Drive Growth

Canada's economy showed signs of recovery in Q2, growing at an annualized rate of 3.3%, its fastest pace since 2023. This rebound is attributed to a strong increase in exports and solid domestic demand.

The country's GDP growth was revised upward from 0.3% in the first quarter, indicating that Canada may not have been in a technical recession as previously thought. Domestic consumption and expenditure patterns suggest that the economy is slowly adapting to the impacts of US import tariffs.

Royce Mendes, managing director and head of macro strategy at Desjardins, notes that households and businesses were beginning to navigate trade-related uncertainty before the latest round of tariffs. However, this new wave of protectionism injects significant uncertainty into the outlook.