RBC Economics presents an in-depth analysis of the key drivers of economic activity in Canada and the United States, including global factors that affect near-term forecasts.
Trade tensions with the United States have ramped up again, and energy prices have climbed higher as conflict in the Middle East drags on, but Canada’s economy has also continued to show resilience through the first half of 2026. Canadian GDP growth rebounded in Q2 after a winter slowdown, and labour market conditions have improved. RBC Economics is cautiously optimistic the Canadian economy will improve on a per-person basis despite re-escalated trade risks and persistently high energy prices:
- One-percent growth is expected in 2026—low historically but better when adjusted for significant demographic headwinds including a population decline for the first time on record in Canada.
- Per-capita growth paints a more encouraging picture of how Canadians are experiencing the economy. The unemployment rate, while still high, dropped to a two-year low over July and August 2026 and is down nearly three-quarters of a percentage point from a year ago.
- The pace of growth varies widely across provinces. US tariffs, high commodity prices, declining populations and shifting housing investment dynamics keep a wedge between regions, putting a 3.5-percentage-point spread between the fastest (Newfoundland and Labrador) and slowest (Quebec) growing provinces.
- British Columbia (0.8%), Ontario (0.7%) and Quebec (0.5%) anchor the bottom of the growth ranking, held back by tariff exposure and population growth slowdowns. Strong Q2 performance in Ontario and better-than-expected Q1 growth in Quebec put them on better footing for the second half of 2026.
“We remain cautiously optimistic the Canadian economy will improve on a per-person basis despite re-escalated trade risks and persistently high energy prices.”