Canada: Growth outpaces forecasts – RBC

Royal Bank of Canada (RBC) economists Abbey Xu and Nathan Janzen note that Canadian Gross Domestic Product (GDP) rose 0.3% in May, with an advance estimate of 0.2% for June, indicating a solid second-quarter rebound after winter stagnation. They highlight broad-based sector gains and estimate Q2 annualized growth of 3.4%, above their 2.2% forecast, while warning that escalating trade tensions and new U.S. tariffs pose downside risks despite improving per-person and per-worker output.

Growth rebounds but trade risks loom

"The stronger-than-expected 0.3% increase in Canadian GDP in May (and early estimate of another 0.2% increase in June) added to evidence that the economy bounced back at a solid pace in the second quarter after growth stalled over the winter."

"Monthly GDP readings and advance estimates are notoriously revision-prone, but the preliminary estimate, including the June advance, points to annualized quarter-over-quarter growth of 3.4% in Q2, more than a percentage point above our 2.2% forecast."

"Looking ahead, escalating trade tensions and the latest U.S. tariff announcements pose downside risks to the outlook, particularly for targeted industries."

"Still, signs of a bounce-back in Q2 growth and stabilization in labour markets are encouraging."

"We continue to expect the economy to gradually improve on a per-person and per-worker basis this year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)