OTTAWA, ON, April 2, 2026 /CNW/ - Canada's economy is expected to post modest growth in 2026 in the face of new global headwinds from the Middle East conflict, according to new research from Signal49 Research, formerly operating as The Conference Board of Canada. Canada's real GDP is forecast to increase by 1.0 per cent in 2026 and a further 2.3 per cent in 2027.
"Adding to existing trade uncertainty, the conflict in the Middle East has triggered a major global energy supply shock, while the closure of the Strait of Hormuz is also disrupting the flow of several other key commodities, including fertilizers, metals, and a range of industrial materials," said Cory Renner, Director, Economic Forecasting at Signal49 Research. "The longer these disruptions persist, the greater the inflationary impact, adding further cost pressures for Canadian households. On the upside, Canada's resource producers--particularly oil–producing provinces--stand to benefit from higher revenues and their role as a longer–term reliable and secure source of supply."
Housing activity is expected to remain weak this year, with subdued consumer confidence and slowing population growth limiting housing demand. On the supply side, labour shortage concerns and poor land availability are adding pressure for home builders, contributing to a projected drop in housing starts.
The United States economy has had a challenging start to 2026, as trade uncertainty and elevated oil prices, due to the conflict in Iran, weigh on growth and household budgets. These factors are constraining investment growth and job gains, keeping overall economic momentum sluggish until trade and price stability improve. The U.S. economy is projected to expand by 2.0 per cent in 2026 and 2.1 per cent in 2027.
Canada's trade in goods continues to hinder growth prospects, as tensions with the U.S. disrupt exports. While the renegotiation of the Canada-U.S.-Mexico Agreement later this year could provide some relief, exports are expected to contract further in 2026 before recovering in 2027. Imports are also projected to drop this year, though to a lesser extent due to steadier domestic demand.
Canada's labour market is off to a very weak start this year, as the Canadian economy shed a stunning 109,000 jobs in January and February. Job creation is expected to remain weak through the rest of 2026, due to economic uncertainty and cautious hiring. Despite the weak employment growth, the unemployment rate is projected to decline because of even weaker labour force growth. The country's demographic outlook is subdued, as the federal government aims to sharply reduce the number of non-permanent residents, which will decrease Canada's total population by 0.4 per cent in 2026 and a further 0.1 per cent in 2027.
Business investment is showing early signs of recovery this year and is poised to be a key driver of growth beyond the near term. Government measures aimed at boosting capital spending and streamlining major project approvals are expected to support stronger investment activity in the coming years.
About Signal49 Research (formerly operating as The Conference Board of Canada)
Signal49 Research, formerly operating as The Conference Board of Canada, is the country's leading independent research organization. For more than seven decades, Signal49 Research has been providing research that supports evidence-based decision making to solve Canada's toughest problems. Follow Signal49 Research on LinkedIn at the link here. For more information on our organization, please visit the link here.
SOURCE Signal49 Research
Media Contact: Signal49 Research, E-mail: [email protected], Tel: 613-526-3090 ext. 224
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