By Erik Hertzberg and Dana Morgan
(Bloomberg) — Canada’s economy is poised for a weak recovery in the second half of 2025 as exports stage a gradual rebound from tariff damage, analysts say.
Gross domestic product will grow at a 0.5% annualized pace in the third quarter, according to a Bloomberg survey of economists. That’s up from the 0.1% expected in last month’s survey, and follows a 1.6% contraction in the second quarter.
Economists also see exports rising 3.3% after collapsing at a 27% annualized pace in the previous quarter.
U.S. President Donald Trump has imposed 35% tariffs on Canadian goods that don’t comply with the U.S.-Mexico-Canada Agreement. Firms are increasingly shipping under the trade deal, but the exemption doesn’t apply to sectoral tariffs on steel, aluminum, autos and copper — which are causing the most pain in Canada.
The survey suggests Canada’s economy will struggle to regain momentum for some time, averaging 1.2% and 1.1% yearly growth in 2025 and 2026 respectively.
“This is a bruised economy,” Fred Demers, head strategist of multi-asset solutions with BMO Global Asset Management, said by email.
“I doubt 2026 will see an above-trend pace, and Canada is likely to remain sub-2% until at least middle of next year.”
Analysts see the uncertainty of the trade outlook weighing on business investment, which is expected to decline 0.5% in the third quarter. Still, that’s an improvement from the previous survey, when economists had expected a 4.3% decline.
Unemployment is seen peaking at 7.3% in final three months of this year. Inflation is expected to hover around the Bank of Canada’s 2% target over the forecast horizon.
Statistics Canada data released Friday suggest the economy will expand 0.7% in the third quarter. The Bank of Canada expects a roughly 1% increase.
The survey of as many as 30 economists was conducted from Sept. 19 to Sept. 24.
–With assistance from Mario Baker Ramirez.
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Last modified: September 28, 2025