Canada’s economic outlook is deteriorating further than previously expected, with the central bank warning that already weak growth forecasts for 2026 are likely to be revised even lower.Tiff Macklem said the latest data shows the economy is underperforming compared to projections released earlier this year, with key indicators pointing to slower momentum and rising uncertainty.“Canada’s economy is dealing with a lot,” Macklem told reporters, adding that near-term growth is now expected to come in below the central bank’s January forecast. “The risks are tilted to the downside.”Blacklock's Reporter said the Bank of Canada had already downgraded its 2026 growth outlook to 1.1%, down from 1.4% projected last October and 1.8% a year earlier. Macklem signalled that even that reduced figure may now be too optimistic.Exports are weakening, the housing market remains soft, and recent labour data shows job losses offsetting gains seen late last year, according to the bank. Volatility in trade figures has added further uncertainty to the outlook..Compounding the situation is the impact of rising global instability. Macklem pointed to the recent conflict in the Middle East as a key factor driving oil prices higher, which could push inflation upward in the short term despite having hovered near the 2% target for more than a year.While higher commodity prices can boost national income in an energy-exporting country like Canada, Macklem said the effect is uneven. “For consumers or any business buying those products, those costs are up. They are getting squeezed,” he said.The central bank held its benchmark interest rate steady at 2.25%, with its next rate decision scheduled for April 29.Macklem cautioned that the longer geopolitical tensions persist, the greater the risk to economic stability, though he did not provide details on potential scenarios. “Uncertainty is high,” he said. “We need to look at the whole situation.”The federal government’s last fiscal outlook, released November 4, projected a recovery through 2026 driven by stronger exports and domestic demand, but those assumptions have yet to be updated in light of recent developments.
