Despite widespread fears in 2025 that Canada faced imminent economic collapse due to trade tariffs—with predictions of recession and severe confidence declines—the economy demonstrated resilience. Contrary to expectations, Canada avoided recession, maintained positive GDP growth, created jobs and saw household balance sheets strengthen.
This momentum looks to continue into 2026. RBC Economics identified six themes they will be exploring over the upcoming year: trade risks, demographic shifts, regional fragmentation, affordability challenges, monetary-fiscal dynamics and future economic opportunities.
Six key trends in 2026
- Trade calibrations continue: Trade uncertainty will persist over the course of 2026, but the focus will be on the long legs of this transitional moment—and perhaps a bit less on the headlines around the CUSMA extension itself.
- Demographic challenges: Canada’s immigration policy reversal will drive flat population growth, easing labour market pressures and boosting per-capita GDP while simultaneously requiring fewer new jobs to maintain employment stability.
- Regional fragmentation: Viewing Canada’s story in contrasting local colours will become even more important. Some regions are seeing positive momentum, others are hitting major headwinds, and some are experiencing a mix of both.
- Affordability pressures: Canada’s affordability crisis persists despite moderating inflation, as high housing costs and demographic shifts disproportionately hurt lower-income groups.
- The monetary to fiscal handoff: Facing structural challenges beyond monetary policy’s reach, Canada will increasingly rely on fiscal stimulus—boosting GDP by 0.4 percentage points in 2025 and 2026—as government leadership overtakes central bank action.
- Canada’s future in play: Canada’s economic transition will gain clarity through export diversification, fiscal incentives to boost private investment and progress on major projects.
“Canada spent 2025 facing what many believed would be a catastrophic trade shock. And yet, Canada’s economy did not collapse. There were no two quarters of negative gross domestic product, the country added jobs and household balance sheets improved over the course of the year.”