OTTAWA, ON, Jan. 9, 2026 /CNW/ - Economic uncertainty continues to weigh on the economy, but government stimulus, better business investment, improving consumer confidence, and a resolution of the trade dispute should boost the economy according to new research from The Conference Board of Canada. GDP is forecast to have increased 1.7 per cent in 2025 and is anticipated to grow a further 1.3 per cent in 2026.
"While the Canada–U.S.–Mexico Agreement negotiations later in 2026 could either support or hinder growth, we anticipate the latest federal budget will undoubtedly boost economic activity," said Cory Renner, Director, Economic Forecasting at The Conference Board of Canada. "In one way or another, the budget will help growth prospects in every area of the economy, from trade and investment to housing and consumers."
Canada's labour market will enter 2026 on relatively firm footing, supported by recent momentum. However, slowed population growth due to the latest reduction in immigration levels, combined with the planned federal workforce reductions, will dampen job growth in the second half of 2026 and into 2027.
Despite slight improvements in resale housing affordability and strong housing starts, Canada's housing market continues to face challenges. Economic uncertainty, slower population growth, and labour market dynamics are weighing on both homebuyers and builders. As these pressures persist, housing activity is expected to ease in the next few years.
While the United States' economy has remained resilient this year, signs of weakness have emerged. The government shutdown dampened growth in the third and fourth quarters of 2025, but most concerning are the rising inflation and unemployment rates following the tariff announcements. The Conference Board of Canada projects the economy to expand by 1.8 per cent in 2025 and 1.7 per cent in 2026.
The export outlook remains subdued as tariffs and trade tensions continue to weigh on performance, particularly amid softer U.S. demand. While trade disputes are expected to ease toward the end of 2026, the recovery could be uneven if key sectors remain subject to tariffs.
Business investment struggled in 2025, held back by U.S. tariffs and economic uncertainty. Looking ahead, favourable policies and government-led initiatives in defense, energy, and transportation are expected to renew investment growth, beginning in 2026. Investment in non-residential structures is expected to see the strongest gains.
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SOURCE Conference Board of Canada
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