The Canadian economy is showing signs of a stronger-than-expected recovery in the second quarter, with the oil and gas sector emerging as a key driver of growth. Preliminary estimates indicate that the country’s real gross domestic product (GDP) grew at an annual rate of 3.4% from April to June, according to industry production data from Statistics Canada.
This figure surpasses the Bank of Canada‘s July forecast, which projected the economy would grow by 2.5% year-over-year in the second quarter. The recovery suggests economic stabilization following a year of stagnation caused by U.S. tariffs and alleviates concerns about a potential recession after a slight decline in GDP in the first quarter.
Growth drivers and industry indicators
Preliminary data show that the economy continued to grow in May and June. Economists surveyed by Bloomberg had expected real GDP to rise by 0.2% in May, while the preliminary estimate from Statistics Canada indicated growth of 0.1% for that month.
Goods-producing industries expanded by 0.6% due to broad increases across various sectors. The real estate, rental, and leasing sector contributed 0.2% to growth in the services sector. The largest increase in May came from mining, quarrying, and oil and gas extraction, which rose by 1%. Overall, 13 out of 20 economic sectors reported growth.
In a separate report, Statistics Canada noted that crude oil production volume in May was the highest for that month since 2016. This coincided with rising global demand amid risks to energy supplies related to the situation in the Middle East.
Expectations and challenges
The head of the Bank of Canada, Tiff Macklem, stated earlier this month that businesses are adapting to the new trade reality, and the central bank anticipates further economic recovery. However, according to the latest summary of the regulator’s discussions, some officials remain concerned about the sustainability of this recovery.
U.S. President Donald Trump increased trade uncertainty earlier this month by threatening to impose new tariffs on certain Canadian goods, set to take effect on August 19.
Source: Bloomberg
