Real gross domestic product (GDP) increased 0.8% in the second quarter of 2026, led by higher exports, household spending and business capital investment. The change in real GDP for the first quarter of 2026 was revised from 0.0% to 0.1%, led by upward revisions to exports, particularly non-metallic minerals and energy products, reported Statistics Canada on Friday.
On a per capita basis real GDP increased 1.0% in the second quarter of 2026, as the Canadian population declined for the third consecutive quarter, noted the federal agency.
Statistics Canada said exports rose 3.6% in the second quarter of 2026, the largest increase since the first quarter of 2023. The rise in exports in the second quarter of 2026 was led by an increase in exports of passenger cars and light trucks (+27.0%), coinciding with a rebound in auto production in Canada following declines in the preceding two quarters. Higher exports of intermediate metal products, energy products, and industrial machinery and equipment also boosted overall export volumes in the second quarter.
Imports rose 0.3% in the second quarter of 2026, after increasing 3.1% the previous quarter. Higher imports of tires, motor vehicle engines and vehicle parts led the overall increase, followed by imports of basic chemicals, and computers and computer peripherals. These increases were partially offset by a decline in imports of intermediate metal products, mainly unwrought gold, it said.
“Household final consumption expenditure rose 0.8% in the second quarter of 2026, led by higher spending on mutual funds and other investment services, passenger vehicles and rent. Meanwhile, households purchased less on gasoline and food in the second quarter, likely in response to higher prices. On a per capita basis, housing spending was up 1.0% in the second quarter,” added Statistics Canada.
“The second quarter bounce-back has landed as expected. Healthy recoveries were seen across the board, with still solid business investment. Ultimately this print shows that growth was roughly 1.8% (annualized) in the first half, with volatility in trade figures muddying the waters. This is a welcome result after some nervous handwringing about a fourth quarter contraction and a flat Q1,” said Andrew Hencic, Director & Senior Economist, TD Economics.
“The problem going forward is that trade uncertainty is back with new U.S. tariffs now imposed, Canadian retaliation due early next month, and the prospect of further escalation hard to dismiss. As we’ve written, the newly imposed duties are likely to shave 0.3 to 0.6 percentage points from growth over the next year. This would still leave growth through 2027 in the mid-1% range, but further escalation risks dragging this figure lower.”
Andrew Grantham, Senior Economist, CIBC Capital Markets, said the Canadian economy posted impressive growth in the second quarter of the year, driven by a surge in exports but also strong growth in domestic demand.
“However, given the recent escalation of trade tensions with the US, and with monthly data suggesting that the economy was already slowing even before new tariffs hit, today’s release will be viewed as old news and doesn’t change our forecast for the Bank of Canada to remain on hold,” he said.
“Consumer spending was also very solid in the quarter, with real spending rising by 3.3% annualized even as the sharp increase in gasoline prices drove inflation higher. Â Spending growth was supported by a one-off payment of expanded household benefits from the federal government, which contributed to an 8.8% annualized increase in disposable incomes on the quarter. That meant that, even with strong spending growth, the household savings rate edged up slightly to 3.7%, from 3.3% in the prior quarter.”
Doug Porter, Chief Economist, BMO Capital Markets, said: “While impressive overall, there’s not a lot to seriously move the needle bigger picture for the BoC. The economy was better than the Bank expected in Q2 (they had 2.5%) and appeared to be picking up steam, but the sluggish start to Q3 and the trade flare-up cast a dark cloud over the near-term outlook. One encouraging development, reinforced by the Q2 uptick, is a comeback in business investment, especially for M&E (now up 6.3% y/y). Still, the BoC will likely wait and see how the economy handles the latest tariff spat—and how the tussle develops—before judging where rates need to go next. Look for the BoC to be on hold into 2027. That posture could last well into next year depending on how the trade backdrop unfolds and just how growth and inflation respond to the tariffs and counter-tariffs.”
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