Canada’s Q2 GDP is projected to rise 3.4% SAAR, exceeding the Bank of Canada’s 2.5% estimate, though new US tariffs pose risks.
Canada’s economy is poised for a strong rebound in Q2, with Real GDP expected to grow 3.4% seasonally adjusted annualized rate (SAAR), up from -0.1% in Q1. The gain outpaces the Bank of Canada’s (BoC) 2.5% projection, driven by domestic demand and exports. Statistics Canada’s advanced July GDP estimate will provide an early Q3 read on Friday.
The recovery faces headwinds from escalating US-Canada trade tensions. New 50% tariffs on nearly $20 billion in Canadian imports, equivalent to 0.85% of GDP, took effect Saturday after trade talks collapsed. Canada plans to retaliate with matching tariffs starting September 8.
Despite risks, the BoC may hold rates steady as core inflation nears its 2% target, supporting economic activity. The tariffs exclude energy, potash, and critical minerals but cover products like wine, cement, and hockey sticks.