TD Securities economists Robert Both and Emma Lawrence anticipate a sharp rebound in Canada's Gross Domestic Product (GDP) growth for the second quarter, primarily driven by stronger exports and robust services activity [1]. They forecast expenditure-based GDP to grow at an annualized rate of 3.5%, which is higher than the market consensus of 3.3% [1]. Industry-level GDP for June is expected to increase by 0.3% month-over-month, surpassing flash estimates of a 0.2% rise [1]. The economists also predict that new flash estimates will indicate continued momentum into July, suggesting that Q3 GDP will remain above potential output and reinforcing a constructive outlook for the Canadian Dollar [1].
Exports are highlighted as the main driver of the Q2 recovery, with TD Securities noting that the Q2 National Accounts represent a significant risk event for the week [1]. The anticipated rebound follows a slowdown in Q4 and Q1, and the strong performance in exports is seen as underpinning the positive GDP growth [1].
Additionally, Thursday's payroll employment report is expected to provide further insight into June's growth conditions, coinciding with the release of the current account balance for Q2 [1]. These upcoming data points may offer additional clarity on the sustainability of the economic rebound and its implications for the Canadian Dollar [1].
CONCLUSION
TD Securities projects a robust GDP rebound for Canada in Q2, led by strong exports and services, which is expected to support the Canadian Dollar. The forecasted growth exceeds market expectations, and continued momentum into Q3 could reinforce positive sentiment. Upcoming employment and current account data will be key for confirming the strength of this recovery.