Q2 2026 Economic Outlook ​

Forward from Chief Economist, Judith Bosire.

If you only followed the economic headlines this quarter, you might think the story was about whether Canada was entering a recession. ​

For many households and small businesses, the focus was different. Was life becoming more affordable? Did businesses feel confident enough to invest? Did families have a little more room in the monthly budget? Could young people find work and begin building financial stability?​

Revised Q2 data told a different story than many expected. Canada's economy grew by 3.3% on an annualized basis, driven by stronger exports, rising household spending, a rebound in residential investment, and  increased  business capital investment. Earlier concerns about a recession largely faded as economic growth proved more resilient than anticipated. Yet  affordability pressures remained elevated, housing continued to challenge many households, and business confidence remained constrained by ongoing trade uncertainty. ​

As we enter the second half of 2026, Canada appears positioned for modest growth rather than recession. Interest rates are expected to remain on hold, but trade uncertainty, uneven business investment, and persistent affordability pressures suggest that the path forward will come with growing pains. British Columbia’s outlook remains uneven, with natural resources and export activity providing support while population decline, housing affordability challenges, and trade exposure weigh on other parts of the economy. ​

The headlines improved this quarter. What we are  still waiting to see is whether this modest growth can translate into greater affordability, stronger financial security, and more opportunity for households, businesses, and communities. ​