After Canada’s economy slipped into a technical recession at the end of May ’26, a new outlook by the Organisation for Economic Co-operation & Development (OECD) said on Wednesday, 3 June, that GDP growth is set to rebound later this year and is expected to continue into ’27.
In a note about the Canadian economy on Wednesday, 3 June, the OECD said that GDP growth was expected to strengthen over both ’26 and ’27.
The OECD outlook said that Canada’s GDP growth is forecast to reach 1.2% by the end of ’26. It’s expected to strengthen further next year in ’27 to reach 1.7%. This was as the Canadian economy recovers from the shock of tariffs imposed by U.S. President Donald Trump.
The report further added that household consumption, besides government spending on defence as well as infrastructure, may continue to underpin growth. Business investment is expected to recover gradually, contributing to the ongoing recovery.
Canada’s status as a net energy exporter may help exports grow over the next couple of years. Canadian exporters are set to benefit from higher energy prices as they are linked to the Middle East conflict.
The report also predicts a rise in Canadian inflation in the near future. However, it’s likely to ease once again toward the Bank of Canada‘s (BoC) 2% target over the longer term.
The BoC’s likely to proceed with caution. This caution is due to monetary policy expected to remain unchanged in the near term. The BoC is expected to overlook temporary energy-related price increases due to economic slack, according to the OECD report.
Statistics Canada said on Friday, 29 May, that GDP fell during the 1st quarter of ’26 by 0.1% at an annualised rate. It follows a revised 1% annualised decline during the 4th quarter of ’25.
On a quarter-over-quarter basis, the agency says that growth was essentially unchanged. However, small movements in quarterly figures often multiply when converted to annualised rates.
