Canada’s Economy Is Coming Back to Life: Growth Is Still Cautious, but Already Visible

Canada’s economy is showing its first signs of recovery after the slowdown at the end of 2025. According to Statistics Canada, the country’s real GDP grew by 0.2% in February 2026, following a 0.1% increase in January. Preliminary estimates suggest that in the first quarter, the economy may have grown by about 1.7% annualized, although final data will be released later.

The main driver of growth was the manufacturing sector, which expanded by 1.8% in February — its strongest monthly result in about three years. The rebound was especially noticeable in the automotive industry: motor vehicle production rose by 20.4%, auto parts by 4.2%, and machinery and equipment by 8.7%. Transportation equipment manufacturing also nearly recovered from its January decline, adding 5.5%.

Transportation and logistics also showed positive momentum: the sector grew by 1.2%, while freight transportation posted its strongest increase since 2021. This is an important signal: when goods are once again being produced and moved more actively, it means business is gradually returning to a normal rhythm.

However, the picture is not entirely bright. The public sector declined by 0.3%, education by 0.5%, and arts, entertainment and recreation by 2.5%. Some may see a reduction in government spending as positive for the budget, but for employment and services, it remains a concerning sign.

The Bank of Canada forecasts moderate growth: 1.2% in 2026, 1.6% in 2027, and 1.7% in 2028. The central bank notes that the recovery will be gradual, amid trade uncertainty and the effects of U.S. tariffs.

By Anna Prikhodko