Canada Economy Surges 3.3% as Exports and Domestic Demand Boost Growth

Canada's economy has rebounded sharply in the second quarter after six months of virtually no growth, thanks to a strong jump in exports and solid domestic demand. According to Statistics Canada, GDP grew at an annualized rate of 3.3% in the second quarter, the fastest rate since 2023.

Domestic demand, led by consumer spending and business investments, has signaled that the economy is slowly brushing off the impacts of over 18 months of U.S. import tariffs. Household final consumption expenditure rose 0.8%, its highest level in three quarters, driven by higher salaries and government benefits.

The growth was also attributed to a 3.6% increase in exports, the biggest jump in over three years, StatsCan said. Business investment sprang to a solid 2.3% growth in the second quarter from a contraction of 1.3%, the first time in a year and a half that business investment has expanded.

However, despite this positive news, economists are cautious about the impact of a new 50% U.S. import tariff on $20 billion of Canadian exports. Desjardins managing director Royce Mendes said it seems like households and businesses were beginning to find ways of navigating trade-related uncertainty before the latest round of tariffs.