After Canada’s economy slipped into a technical recession last week, a new outlook by the Organisation for Economic Co-operation and Development, or OECD, said on Wednesday said that GDP growth is set to rebound later in the year and continue growing into 2027.
“GDP growth is expected to strengthen over 2026 and 2027,” the OECD said in a note about Canada’s economy on Wednesday.
Canada’s GDP growth is expected to reach 1.2 per cent by the end of 2026 and strengthen further in 2027, reaching 1.7 per cent, the OECD outlook said, as the Canadian economy recovers from the shock of U.S. President Donald Trump’s tariffs.
“Household consumption and government spending on defence and infrastructure will continue to underpin growth, while business investment should recover gradually,” the report said.
Canada’s position as a net energy exporter will help exports grow over the next two years. Canadian exporters are set to benefit from higher energy prices linked to the Middle East conflict, it said.
While inflation in Canada could rise in the near-term, it will likely ease back to the Bank of Canada’s two per cent target over the longer term, the report added.
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The Bank of Canada is likely to proceed with caution, with monetary policy “expected to stay unchanged in the near term, as the Bank of Canada is set to look through temporary energy‑related price increases given the remaining economic slack,” the OECD report said.
Statistics Canada said Friday that GDP in the first quarter of 2026 fell 0.1 per cent on an annualized rate, and follows a revised one per cent annualized decline in the fourth quarter of 2025. A technical recession is most commonly defined as two consecutive quarters with negative economic growth.
On a quarter-over-quarter basis, the agency says growth was essentially unchanged, but small movements in quarterly figures are magnified when converted into annualized rates. Real GDP declined last October and in March, but growth was either flat or positive in the four months in between.
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