Canada's updated economic forecast indicates a slight downward revision in real GDP growth, projecting 1.1% for 2026, down from 1.2%, and 1.9% for both 2027 and 2028, compared to earlier estimates of 2.0%. This adjustment reflects concerns over the long-term impact of tariffs on economic performance, suggesting a persistent drag on growth potential. The primary market transmission mechanism is through risk appetite, as lower growth expectations may lead to reduced investor confidence and capital flows into Canadian assets. Sectors sensitive to economic growth, such as consumer discretionary and industrials, may experience heightened volatility. Traders will be particularly attentive to upcoming employment data, which could provide further insights into economic momentum and influence market sentiment.
CANADA FORECASTS REAL GDP GROWTH OF 1.1% IN 2026 (DOWN FROM 1.2% IN NOVEMBER), 1.9% IN 2027 (VS 2.0%), UNCHANGED AT 1.9% IN 2028, AND 1.9% IN 2029 (VS 2.0%), WITH REAL GDP UNLIKELY TO REGAIN ITS PRE-TARIFF LEVEL AND…
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