Canada's economy shows gradual recovery as GDP firms and inflation eases toward target
Real GDP growth stood at 1.4% year-over-year as of July, with forecasters expecting further strengthening through 2026 and 2027 as the economy works through last year's trade-related slowdown.
Canada's real GDP growth stood at 1.4% year-over-year as of July, with the OECD projecting the pace to strengthen to 1.2% and then 1.7% over 2026 and 2027 as the economy continues recovering from 2025's trade-related slowdown tied to higher U.S. tariffs.
Consumer prices were running at 3.0% year-over-year as of early October. Forecasters expect headline inflation to rise temporarily before easing back toward the Bank of Canada's 2% target, with core inflation seen staying closer to target already, restrained by continued economic slack.
Household consumption and government spending on defence and infrastructure are underpinning growth for now, with business investment expected to recover more gradually as firms work through the aftermath of last year's tariff shock.
Source: OECD Economic Outlook / Statistics Canada (https://www.oecd.org/en/publications/oecd-economic-outlook-volume-2026-issue-1_2d1956f0-en/full-report/canada_ec57eeac.html)