TD Sees Canada's 2026 GDP Growth Better Than Last Year

09:55 AM EST, 02/12/2026 (MT Newswires) -- The economic temperature for Canada will be "lukewarm" in 2026, but with a little more heat turned up by the end of the year, said TD.

The bank anticipates 2026 will end with an economy 1.4% larger than 2025, which doesn't sound like much but would be an improved pace from last year's 0.8% pace.

Greater government spending and ongoing household income gains support activity, stated TD. In addition, the bank anticipates that the worst effects of the United States trade shock have faded -- but this comes with a high degree of uncertainty as the CUSMA review ramps up.

Business investment will still feel the weight of trade uncertainty and the gradual rotation of exports to new markets, wrote the bank in a note to clients.

A shrinking population will weigh on employment growth, limiting the speed of recovery to housing demand and spending. All together, TD estimates little job growth in the first half of the year.

In normal times, zero employment growth would ring the alarm bell. However, fewer available workers will dominate the direction of the unemployment rate. Limited slack in the labor market should prompt its very gradual decline through the year, added the bank.

This dynamic was evident in January, when a drop in employment was met with a drop in the unemployment rate.

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