Canada's Economy Shows Resilience Amid Headwinds

The Canadian economy has shown resilience despite various headwinds, according to Royal Bank of Canada (RBC) analysts. They highlight that Gross Domestic Product (GDP) growth improved in Q2 2026 and per-capita gains were supported by a lower unemployment rate. The country's labour markets are strong, with wage growth at its highest level in nearly two years, reaching 1.4%. This has underpinned consumer spending, which remains firm despite higher energy costs.

The Bank of Canada is expected to stay on hold through 2026, but there are potential risks of rate hikes from early 2027. High energy prices have not yet shown significant signs of bleeding through to broader inflation, leaving the central bank with the option to remain patient.