SIG-077 other PENDING

Canada recession before 2027?

Direction NO underpriced · Confidence HIGH · Closes 2026-12-31

Market price

40%

at signal

Our estimate

27%

calibrated

Gap

+13.5pp

market vs ours

Status

PENDING

2026-12-31 close

Market price history

Evidence

RBC Economics (2026): Forecasts 1.4% GDP growth for Canada in 2026, with household consumption up 1.6% and fixed investment up 1.3%
EDC (2026): 'Canada sidesteps recession—but risks remain in 2026' — base case is no recession despite tariff headwinds
FCC (2026): 'Canada's economy poised to decelerate in 2026' — deceleration expected but not contraction
TD Economics Quarterly Forecast (2026): Projects positive but modest growth through 2026
BDC Canadian Economic Outlook (2026): Base case remains positive growth at 1.4% despite tariff risks and CUSMA review

Counter-evidence

GDP hovering near zero — doesn't take much to tip into recession
Tariff risks from US trade policy remain significant downside
CUSMA scheduled for review mid-2026 — revisions could restrict Canadian exporters' US market access
Iran war creating global economic uncertainty and energy price volatility