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Canadian GDP to rebound in Q2 as trade and spending improve
The forecast points to a 0.2% increase in June, and analysts expect exports to have outpaced imports, aided by an auto sector recovery.
Canada’s economy is expected to show a rebound in Q2, with upcoming GDP releases for June and the quarter positioned to confirm improved economic activity after a weak winter, according to Action Forex citing Statistics Canada’s reporting approach.
Statistics Canada publishes two real GDP measures, based on monthly production and quarterly expenditure, and they diverged in recent quarters, Action Forex notes. For June, the forecast calls for real GDP to rise 0.2%, building on what the outlet describes as an almost full percentage point increase over April and May, while monthly data in Q2 so far tracks above 3% annualized growth.
Action Forex attributes much of the Q2 strength to factors including net trade, with exports outpacing imports and a recovery in the auto sector after winter production disruptions. The outlet also cites firmer labor market signals, stronger consumer spending based on RBC cardholder transactions, and improved indicators for business investment and residential activity, though housing remains soft.
Looking ahead, Action Forex says some Q2 boosts, such as the auto and trade contributions, are unlikely to repeat in coming quarters. It also flags headwinds from declining population, trade uncertainty, and remaining product-specific tariffs, while noting that details of a trade deal to prevent additional U.S. tariffs on Canadian imports were still pending ahead of an August 21 deadline and early reports suggest some existing tariffs on autos, steel, and aluminum could be lowered.