Some Canadians – notably folks supporting the federal Liberals – were celebrating last week as we saw the largest increase in GDP for the second quarter of this year in the past four years. Second quarter real GDP increased by 0.8 per cent – 3.3 per cent on an annualized basis. A slight readjustment of GDP data for the first quarter of 2026 bumped the numbers up slightly so that the two consecutive quarters of negative economic performance – definition of a recession – that were previously measured did not take place. First quarter GDP did not get revised upward by much – from a decline of 0.1 per cent to an increase of just 0.1 per cent. It’s doubtful the Canadians that have been frequenting food banks for the last couple of years will now be laughing all the way to the bank. It’s also important to note that economic data get revised all the time, so even these recent numbers could be revised up or down in some future data release.
There were some good economic numbers in other areas as well. In June, Canada had the fourth consecutive monthly trade surplus, driven by strong exports. We also experienced our first current account (funds flowing into and out of a nation from trade, investment and financial transfers) surplus in four years. Unfortunately, most economists expect this to be a temporary bump in economic data, not an enduring trend. Early data for the third quarter indicate that growth stalled in July. The escalation of trade pressures following the collapse of Canada-U.S. trade negotiations is also expected to constrain Canada’s growth in the coming months.
The reasons underlying this recent improvement in economic fortunes really tells the tale. The main drivers of our economic data in the second quarter of 2026 were oil, gas, other resources and auto exports. The boost in auto exports was a result of the end of retooling shutdowns at assembly plants and an end to semiconductor shortages in earlier months. In other words, likely a temporary phenomenon. Growth stemming from the oil and gas sector was primarily due to price increases because of global disruptions.
Strong gold exports were also a factor in Canada’s improved fortunes. Although other exports often get more attention, Canada is the fourth-largest producer of gold in the world and that production has increased significantly in recent years. Any time of uncertainty gives a boost to gold prices as a safe asset in a chaotic world, which recent events have certainly created.
Many Canadians love to hate U.S. President Donald Trump, yet perversely his actions were behind many of the recent economic gains for Canada. The war in Iran has been a key cause of oil price increases, and global uncertainty has boosted gold prices. As well, Canada remains a stable, reliable source of resources while turmoil dominates the Middle East and other parts of the globe. Even though we may reap some short-term gains from these difficult circumstances, no one should want them to continue as their downsides are much greater than temporary benefits for Canada.
It’s ironic to see Liberals ecstatic over some positive economic data that are largely driven by the industries they have worked hard to suppress for over a decade. It will be interesting to see if the obvious benefits from our resources will compel the Liberal government to loosen up on its many restrictions on that industry. All evidence to date suggests that will not be the case.
Overall, some of the jubilation over these recent economic data reminds me of that old Doors tune “Been Down So Long It Looks Like Up To Me.” Canadians have heard such negative economic data for years that any glimmer of hope is grasped at desperately as a justification that government policies are working to improve our economic fortunes. These recent data are certainly a welcome improvement on numbers that have been abysmal for years, but they do not represent a trend.
Virtually none of Canada’s economic fundamentals have changed. We do not have a reformed taxation system, a government that is shrinking significantly, a backing off from costly, ineffective “climate” policies and taxes or improved productivity. Our federal and some provincial governments are still hobbling the oil, gas and other resource industries that continue to provide the most positive economic developments. One can only imagine how amazing our economic performance and standard of living would be if we had governments that actually took advantage of our wonderful natural resource endowment instead of constantly stifling it. We can dream, can’t we?
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
