Canada’s Economic Recovery Expected to Remain Slow Amid Trade War, KPMG Forecasts

Canada’s economy is expected to face a slow and uneven recovery over the next two years, according to a new report by KPMG. The accounting firm’s Fall 2026 Economic Outlook forecasts that Canada’s GDP growth will remain at just 1 per cent in 2026 due to ongoing trade tensions.

The report projects economic growth to improve to 1.8 per cent in 2027 and 2 per cent in 2028. KPMG noted that its forecast does not factor in any potential trade deal with the United States.

However, continued consumer spending, increased investment in artificial intelligence infrastructure and a boost from the 2026 federal budget are expected to gradually strengthen the economy.

At the regional level, Alberta and other Prairie provinces could lead economic growth, supported by higher oil prices and major projects. Ontario’s economic growth is expected to improve in 2027, while Quebec’s economy could continue to experience slower growth.

The report also suggests that the Canadian dollar could remain between $1.40 and $1.42 against the U.S. dollar in the near term.