National Bank of Canada’s (NBC) Economics and Strategy team slightly lowers its 2026 Canadian GDP forecast to 1.1% and highlights a sharp drop in potential GDP to 0.6% due to demographic recalibration. They stress that US trade uncertainties and weak non-resource exports are weighing on Canada’s medium-term outlook.

Manufacturing slump and US tensions weigh

"In this uncertain environment, which could delay the investment rebound we had expected, Canadian growth in 2026 has been revised slightly downward to 1.1% (from 1.2% previously), against a backdrop of a sharp decline in potential GDP growth linked to demographic recalibration."

"As for Canada's ability to rapidly diversify its export markets, it is important to remain realistic."

"This diversification can only happen over the long term, while the United States will remain by far our main export market for the foreseeable future."

"Nevertheless, total Canadian exports are being negatively affected by the current economic situation."

"According to the most recent data, Canada's exports have fallen by 2% since the U.S. election in November 2024, due to a 4% drop in non-resource goods."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)