Canada’s economy recorded a strong recovery in the second quarter of 2026, expanding at an annualised rate of 3.3 percent, according to Statistics Canada.
The growth marks the fastest pace since 2023 and comes after the economy recorded only 0.3 percent growth in the first quarter, following a revision to earlier figures. The revision also means Canada avoided entering a technical recession, which is commonly defined as two consecutive quarters of economic contraction.
The recovery was supported by stronger exports, household spending and business investment. Exports increased by 3.6 percent, marking their largest rise in more than three years.
Household consumption also improved, rising 0.8 percent, its strongest performance in three quarters. Economists attributed the increase partly to higher wages and government benefits.
Business investment rose by 2.3 percent, reversing a 1.3 percent contraction in the previous quarter. Investment in residential and non-residential structures, as well as machinery and equipment, contributed to the increase.
However, economists warned that the recovery could face fresh challenges because of escalating trade tensions between Canada and the United States.
US President Donald Trump recently imposed a 50 percent tariff on $20 billion worth of Canadian exports, prompting Canada to introduce retaliatory measures against US imports.
Analysts said the new tariffs could slow economic growth in the coming quarters by increasing uncertainty for businesses and consumers.
The Canadian dollar also weakened slightly following the release of the economic figures, trading at around 72.17 US cents.
Meanwhile, Canada's economy grew 0.3 percent in June, slightly above the 0.2 percent forecast. An advance estimate suggested that economic activity remained largely unchanged in July.
Despite the strong second-quarter performance, economists cautioned that continued US-Canada trade tensions, new tariffs and demographic pressures could weigh on Canada's economic outlook.
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