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National Bank Cuts Its Canada's GDP Growth Forecast to 0.7% for 2026 on a Weak Q1

BY MT Newswires | ECONOMIC | 06/22/26 12:34 PM EDT

12:34 PM EDT, 06/22/2026 (MT Newswires) -- The weaker first-quarter reading for Canadian gross domestic product (GDP), led National Bank of Canada Capital Markets to lower its 2026 growth forecast to 0.7% from 1.0%.

The new estimate is based on the United States-Mexico-Canada, or USMCA, trade agreement being renewed, although trade uncertainty remains the main risk to the outlook, the bank wrote in a note published on Friday.

Canadian GDP shrank by 0.1% annualized in the first quarter, following a 1.0% drop in the previous quarter, putting the economy in a technical recession.

"We do not believe that the recession label is warranted," economists Matthieu Arseneau, Alexandra Ducharme and Daren King noted..

The Canadian economy has softened over the last two quarters and still appears to be operating below potential, with wage growth cooling and stable core inflation, added National Bank.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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