Potential output in Canada: 2026 assessment

Alex Chernoff, Christopher Hajzler, Stéphanie Houle, Gabriella Ruggero, Olena Senyuta, Karanbir Sohal, Walter Steingress and Temel Taskin

No 2026-19, Staff Analytical Papers from Bank of Canada

Abstract: Growth in potential output is expected to drop from 2.3% in 2025 to 1.2% in 2026 given slowing population growth, US tariffs and trade policy uncertainty. It is then estimated to pick up to an average of 1.5% over 2027–29 as strengthening business and government investment supports trend labour productivity (TLP). Gradual adoption of artificial intelligence is also expected to lift TLP growth over the projection horizon. Relative to Scenario 1 in the April 2025 assessment, growth is revised up in 2025 and revised down over 2026–29.

Keywords: Models and tools; Economic models; Monetary policy; Real economy and forecasting; Structural challenges; Demographics and labour supply (search for similar items in EconPapers)
JEL-codes: E2 E3 E4 E5 (search for similar items in EconPapers)
Date: 2026-05
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsap:26-19

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