Canada’s economic growth is expected to strengthen later this year and into 2027, supported by improving hiring activity and recovering business confidence, according to a new provincial outlook from Signal49 Research, the Ottawa-based think-tank formerly known as the Conference Board of Canada.
The report attributes the anticipated rebound to stronger public and private investment, steady growth in consumer spending, and an assumed easing of trade tensions between Canada and the United States. Richard Forbes, principal economist at Signal49 Research, said business investment in Canada has been weak recently but is showing early signs of turning around.
“Business investment has been really weak in Canada recently, but we’re seeing some signs that that could be turning around,” Forbes said. “It is coming from a very low level but it’s starting to turn the corner, so it is optimistic.”
Despite that cautious optimism, the report flags several risks that could weigh on the recovery, including escalating tariffs, the ongoing conflict in the Middle East, and long-term demographic pressures. Forbes said the trade war remains a major threat to the country’s economic outlook.
“The longer it gets drawn out, the more it escalates, the worse the outlook is going to be for Canada,” he said.
Provinces Diverge Sharply in Growth Outlook
The national forecast masks considerable variation at the provincial level, with Newfoundland and Labrador and Ontario representing opposite ends of the spectrum, according to the report.
Newfoundland and Labrador is projected to lead the country’s economic expansion for a second consecutive year, driven by higher crude oil prices and offshore oil projects. The province’s economy is forecast to grow 3.7 per cent in 2026, though the report cautions that longer-term growth will be limited by demographic challenges.
“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, by contrast, is expected to post the weakest growth of any province this year, with its economy expanding by just 0.2 per cent. The report attributes this largely to the impact of U.S. tariffs on the province’s manufacturing base.
“The auto sector has been continually targeted since early 2025 and almost 100 per cent of Canadian auto production is in Ontario,” Forbes said.
Regional Pictures Across the Country
Quebec’s economy faces challenges from broad tariff exposure and slow population growth but is still expected to expand by 0.7 per cent in 2026, aided by a predicted rebound in exports, employment and investment, according to the report.
In British Columbia, population growth is expected to be constrained by tight housing supply and a high cost of living. Still, the report points to LNG developments, strong trade prospects with Asia, and the province’s relative distance from the U.S. trade dispute as factors supporting growth, which is forecast at 1.4 per cent in 2026.
Alberta’s economy is expected to benefit from its resource sector and a growing artificial intelligence industry, with strong job creation and business investment anticipated in 2026 and 2027. The province’s economy is forecast to grow 1.5 per cent in 2026, and the report suggests Alberta will remain one of Canada’s strongest-performing provinces over the coming decade.
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