Canada’s economic growth expected to rebound, but risks remain on the horizon: report

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 per cent 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 per cent, 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 per cent 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 per cent 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 per cent 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 per cent in 2026 and remaining one of Canada’s strongest performers over the coming decade, it said.

This report by The Canadian Press was first published Sept. 10, 2026.

Brett Bundale, The Canadian Press

by The Canadian Press

Canada’s economic growth expected to rebound, but risks remain on the horizon: report

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