Canada’s GDP Ticks Up in July, but Recovery Remains Fragile

Canada’s economy managed a small gain in July 2025, with GDP rising 0.2%, breaking a four-month losing streak. The growth came mainly from the goods-producing sectors, as mining, oil and gas, and manufacturing all moved higher. Auto manufacturing in particular delivered a strong boost, helping offset earlier weakness.

The uptick offers a brief reprieve after a disappointing spring. In the second quarter, the economy contracted 0.4% from the previous quarter and fell 1.6% compared with a year earlier. Economists warn the latest increase is hardly a turnaround, with forecasts suggesting third-quarter growth may struggle to hit 1% annualized.

Challenges remain. Steel output, weighed down by U.S. tariffs, slid further in July and remains well below 2024 levels. Some of the rebound may also reflect a recovery from wildfire disruptions earlier this year, rather than a sign of lasting momentum.

Bank of Canada Governor Tiff Macklem summed it up bluntly: the country is “not in a recession, but not robust either.” Policymakers now face a difficult balance—supporting growth while keeping inflation from flaring back up.