TD Securities economists Robert Both and Emma Lawrence expect Canada’s Q2 National Accounts to show a sharp rebound in Gross Domestic Product (GDP) growth, driven by stronger exports and solid services activity. They forecast expenditure-based GDP at 3.5% annualized and industry-level GDP up 0.3% m/m, with July flash data likely keeping Q3 GDP above potential output, reinforcing a constructive backdrop for the Canadian Dollar.

Exports seen driving Q2 recovery

“Q2 National Accounts provide the main risk event this week, where TD looks for a sharp rebound from the Q4/Q1 slowdown with expenditure-based growth of 3.5% (market: 3.3%) on stronger exports.”

“We look for expenditure-based GDP to post a sharp rebound in Q2 with annualized growth of 3.5%, underpinned by stronger exports.”

“Industry-level GDP for June should mirror the Q2 strength with a 0.3% m/m increase, above flash estimates for a 0.2% print.”

“We also look for new flash estimates to show continued momentum into July to leave Q3 GDP tracking above potential output.”

“Thursday’s payroll employment report will provide a final look into June growth conditions when released Thursday alongside the current account balance for Q2.”