Canada's economy is set for a significant recovery in the second quarter, breaking free from a prolonged period of stagnation, largely due to a surge in oil production.

Preliminary estimates from Statistics Canada released on Tuesday indicate that the gross domestic product expanded by 0.1% in May. This follows a 0.5% GDP increase in April, which surpassed the 0.4% growth forecast by economists in a Bloomberg survey and marked the fastest pace of expansion since July of last year.

Assuming no growth for June, industry-based output data suggests the Canadian economy grew at an annualized rate of 2.3% in the second quarter, pointing to a substantial acceleration in economic activity.

These figures will counter narratives suggesting the Canadian economy is mired in a prolonged downturn. In May, Statistics Canada reported that the expenditure-based GDP had contracted for two consecutive quarters starting from the end of last year, meeting one technical criterion for a recession.

While most economists and the Bank of Canada have refuted this characterization, weaker and more volatile growth has been attributed to U.S. trade policies and a sudden slowdown in the number of non-permanent resident immigrants. The central bank anticipates the economy will operate with excess supply for much of 2026.

Statistics Canada reported that goods-producing industries grew by 1.2% in April, driven primarily by gains in oil and gas extraction.