The Canadian economy is preparing to rebound in the second quarter after half a year of recession

Ottawa —
New data showed that the Canadian economy is heading towards a clear recovery in the second quarter of 2026, driven by a strong increase in oil and gas production, after a period of weakness and slowdown that lasted about half a year.

According to preliminary estimates, GDP grew by 0.1% in May, after rising 0.5% in April, the fastest monthly pace since July of last year.

The data indicates that the economy could grow at an annual rate of 2.3% in the second quarter, even if June records no additional growth, representing an important shift after two consecutive quarterly contractions that sparked debate about whether Canada had entered a recession.

The improvement was mainly driven by the goods sector, especially oil and gas extraction, where industrial crude production increased after unplanned maintenance work affected production during the early months of the year.

The offshore oil and gas sector on the Atlantic coast also recorded an increase in activity, coinciding with rising global energy prices due to tensions in the Middle East.

The manufacturing sector saw growth in April, while construction activity rose for the first time in five months. The real estate sector also supported growth with an increase in home resales, especially in the Toronto area.

These figures ease concerns about a prolonged recession in Canada, although annual growth remains weak compared to the country’s economic potential, amid ongoing pressures from U.S. trade policies and a slowdown in the flow of temporary residents.

Economists see the data as giving the Bank of Canada a reason to be cautious, as the recent growth improvement reduces the need for a rapid interest rate cut, while inflationary pressures remain under control, allowing the bank to maintain its current stance for now.

The numbers reflect an economy that is still in a fragile phase but has temporarily emerged from stagnation, benefiting from the recovery of the energy, manufacturing, and real estate sectors, while awaiting what June data will reveal about the strength and sustainability of this rebound.