Bank of Canada Lifts Slightly GDP Growth Forecasts for This Year, 2027, as Exports, Business Investment Gradually Pick Up

10:18 AM EDT, 04/29/2026 (MT Newswires) -- The Bank of Canada on Wednesday said it slightly lifts its growth forecast for the economy to 1.2% this year, rising to 1.6% in 2027, slightly above potential output growth as exports and business investment gradually pick up.

The gross domestic product is projected to expand by 1.7% in 2028, writes the central bank in its quarterly Monetary Policy Report (MPR).

The previous MPR in January saw GDP growth at 1.1% this year. It didn't give a 2028 forecast.

Economic growth in Canada has been broadly consistent with the outlook in the January MPR, added the BoC. Consumer and government spending are supporting GDP, while United States tariffs and related trade uncertainty are weighing on exports and investment. Inflation had been slowing as expected before the oil price shock occurred.

The war in the Middle East is already affecting the economy, according to Canada's central bank. The immediate impact has been higher gasoline prices, pushing up the consumer price index to 2.4% year over year in March.

The outlook is highly conditional on key assumptions, including that U.S. tariffs remain unchanged and that oil prices gradually decline from US$90 in Q2 to US$75 per barrel by mid-2027.

Inflation is expected to peak in April at about 3% and then return to the 2% target in early 2027, assuming that global oil prices decline as expected, stated Wednesday's MPR. In 2027 and 2028, slack in the economy weighs on prices and largely offsets higher costs, keeping inflation close to the 2% target.

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