Canada’s economic growth is expected to rebound later this year and into 2027 as hiring activity strengthens and business confidence recovers, Signal49 Research said Thursday.
In its provincial five-year outlook, the Ottawa-based think tank formerly known as the Conference Board of Canada said the momentum is supported by stronger public and private investments, steady gains in consumer spending and an assumed easing of Canada-U.S. trade tensions.
Yet escalating tariffs, the ongoing conflict in the Middle East and looming demographic pressures are creating uncertainty and significant headwinds for the Canadian economy, the independent research organization said.
“Business investment has been really weak in Canada recently, but we’re seeing some signs that that could be turning around,” said Richard Forbes, principal economist at Signal49 Research. “It is coming from a very low level but it’s starting to turn the corner, so it is optimistic.”
Still, the trade war remains a significant risk to the country’s economic growth prospects, he said.
“The longer it gets drawn out, the more it escalates, the worse the outlook is going to be for Canada,” Forbes said.
Despite the slightly rosier outlook in the latter half of the year, the economic picture varies considerably by province, with different regions feeling the effects of economic headwinds and tailwinds differently, the think tank said.
The two key standouts are Newfoundland and Labrador and Ontario, which sit at opposite ends of the provincial economic outlook ranking.
Newfoundland and Labrador is expected to lead the country’s economic expansion for the second year in a row, driven by higher crude prices and offshore oil projects, the report said.
The province’s economy will expand 3.7% in 2026, though longer-term growth will be constrained by demographic pressures, it predicted.
“Oil production has really been the driver of Newfoundland and Labrador this year,” Forbes said. “But over the longer term it is one of the weakest-growth provinces because it has a more senior population and trouble attracting migrants.”
Ontario is expected to post the softest growth this year, with the economy expanding just 0.2%, the research organization said.
The country’s most populous province has been one of the hardest hit by U.S. tariffs, largely due to its manufacturing sector, it said.
“The auto sector has been continually targeted since early 2025 and almost 100% of Canadian auto production is in Ontario,” Forbes said.
Quebec’s economy is challenged by its broad exposure to tariffs and slow population growth, but is expected to grow 0.7% in 2026 amid a predicted rebound in exports, employment and investment, Signal49 Research said.
In British Columbia, population growth will be constrained by a tight housing supply and high cost of living, the think tank said.
However, LNG developments, strong trade prospects with Asia and the province’s relative insulation from the U.S. trade dispute will support B.C.’s economy, which is forecasted to grow 1.4% in 2026, it said.
In Alberta, the resource sector and a growing artificial intelligence industry will support the province’s economy in 2026 and 2027, Signal49 Research said.
The province is expected to see strong job creation and robust business investment, with the economy forecasted to grow 1.5% in 2026 and remaining one of Canada’s strongest performers over the coming decade, it said.