Canada's Economy Shows Resilience Amid Trade Tensions

Cautious optimism is the mood in Canada's economy despite ongoing trade tensions and new U.S. tariffs, according to recent data.

The Canadian economy grew by 0.8% in the second quarter of 2026, with a quarterly annualized growth rate of 3.3%, matching median estimates. This growth was driven by all economic components, including exports, which rose 3.6% in the quarter - the largest increase in three years.

Excluding energy, core inflation measures are firmly on target, and there's little evidence of broad-based elevating inflation. As a result, the Bank of Canada is expected to hold its policy rate at 2.25% at its next meeting and through the end of the year.

The resilience shown by Canada's economy in the face of uncertainty is attributed to various factors, including business investments, which are up due to government incentives. Household spending also rose 0.8% last quarter, while household savings reached 3.7%. Residential investments increased by 2.5% after two consecutive quarters of decline.