The International Monetary Fund (IMF) reports that Canada’s economy is projected to grow by 1.1 per cent in 2026 and 1.7 per cent in 2027. This latest World Economic Outlook, released on October 13, leaves Canada's growth projections unchanged from the fund's previous July forecast.

How does Canada compare to neighbors?

Canada's projected expansion lags behind several major economies and regional partners. While the IMF anticipates the United States will grow by 2.3 per cent in 2026, Canada's rate remains significantly lower. Within the Canada-United States-Mexico Agreement (CUSMA) framework, both partners are expected to outpace Canada, with Mexico projected to grow by 1.5 per cent in 2026.

Other economic comparisons for 2026 include:

  • Germany and Britain: 1.3 per cent growth
  • Japan: 0.7 per cent growth
  • France: 0.4 per cent growth

What are the economic risks?

Analysts attribute the modest Canada 2026 growth forecast to trade uncertainty and energy shocks stemming from the war involving Iran. The IMF's projections rely on specific assumptions, such as oil averaging $96 a barrel and the resumption of shipping through the Strait of Hormuz by March.

If these conditions are not met, several risks could weigh on the numbers. These include:

  • An artificial intelligence-related stock market correction
  • Rising bond yields
  • Cyberattacks and high debt levels

IMF research director Silvana Tenreyro noted that "the outlook is highly uneven," highlighting how growth is being reallocated across different nations.

Global trends and technological impacts

The IMF has also highlighted the dual nature of the current global economic landscape. While the boom in artificial intelligence is offsetting some damage from high energy prices, the technology carries its own set of risks. Managing Director Kristalina Georgieva described the effect of artificial intelligence on jobs as "a slow moving tsunami, but a tsunami nonetheless."

Globally, the IMF raised its 2026 forecast for advanced economies to 2.1 per cent. However, the fund noted that growth is increasingly concentrated, with just 32 countries accounting for 95 per cent of global growth.

FAQ

What is the global growth forecast?

The IMF expects global growth to reach 3.1 per cent in 2026 and 3.4 per cent in 2027.

How is Canadian inflation expected to perform?

Canada's inflation is forecast to be at 2.5 per cent in 2026.