Canada’s provincial economies are expected to post modest growth in 2026 as ongoing trade uncertainty, intensified by the conflict in the Middle East, continues to weigh on business confidence and capital spending, according to new research from Signal49 Research.
“Weak population growth will play a critical role in shaping labour markets, as stagnant or declining populations constrain labour force expansion and employment growth while also weighing on consumer spending,” said Cory Renner, Director, Economic Forecasting at Signal49 Research. “The provincial outlooks are expected to improve in 2027 as global tensions ease and an overall successful renegotiation of the Canada-U.S.-Mexico Agreement reduces U.S. trade policy uncertainty.”
Newfoundland and Labrador is expected to lead provincial growth in 2026, with strong oil production and elevated oil prices supporting exports and near-term employment gains. However, a weak demographic outlook, driven by an aging population and negative interprovincial and international migration, is expected to weigh on labour force growth. Real GDP is projected to expand by 2.4 per cent in 2026, said the report.
With affordability pressures continuing to weigh on consumption, British Columbia is expected to see weak household spending growth this year. In addition, weak population growth is expected to constrain labour supply, while labour shortages could re-emerge as baby-boomers retire and less newcomers arrive to take their place. However, strong investment in LNG projects will support growth, with real GDP expected to expand by 1.5 per cent in 2026, it said.
“Increased domestic travel will continue to support Prince Edward Island’s tourism industry. The province is also expected to see strong growth in consumer spending, supported by stable population trends and steady gains in employment and income. On the investment side, activity will be anchored by ongoing work on the $80-million Ocean View Resort redevelopment and a new $170-million waste processing plant. GDP is expected to grow by 1.4 per cent in 2026,” said Signal49Research.
“Relatively strong demographic trends and labour market conditions are expected to support Alberta’s economy in 2026. Household spending is projected to lead the province, benefiting in the near term from elevated oil prices and sustained over the forecast by the province’s stronger population and employment outlooks. GDP is projected to grow by 1.4 per cent in 2026.”
Photo: James Wheeler
The report said the strength in Saskatchewan’s potash and uranium mining industries will boost the province’s growth this year. The province’s labour market is relatively insulated from U.S. tariffs, providing some stability, and allowing exports to perform relatively well for the year. The economy is forecast to expand by 1.2 per cent in 2026.
Strong public infrastructure spending, including work on CancerCare Manitoba’s new headquarters, will support economic activity in the province. Additional support to non-residential investment will come from Deep Sky’s $500-million carbon capture facility. Despite demographic pressures, household spending is expected to grow moderately, underpinned by robust wage gains. Manitoba’s GDP is forecast to increase by 1.0 per cent in 2026, it added.
Signal49Research said population declines and subdued job gains are expected to constrain household spending in Nova Scotia. Investment will provide some offset, supported by ongoing work on the $2-billion Phase 1 of the EverWind wind farm and associated hydrogen and ammonia project. The economy is projected to expand by 1.0 per cent in 2026.
Weak household spending and subdued business investment will hinder New Brunswick’s growth prospects this year. While the province is expected to post modest job growth, a limited pipeline of major projects will drag on investment activity. GDP is projected to grow by 0.9 per cent in 2026, it added
“Quebec’s economy continues to face significant headwinds as U.S. tariffs on steel, aluminum, and forestry products weigh on business investment and employment gains. Despite a weak demographic outlook, with low international migration projected until 2030, strong wage gains will support consumption. GDP growth is expected to be 0.7 per cent in 2026,” said Signal49Research.
“With Ontario exposed to U.S. tariffs on automative and steel products, growth is expected to be modest in 2026, with the province projected to record some of the weakest job gains among the provinces. Uncertainty in the EV sector continues to cloud the outlook, particularly following Honda’s decision to indefinitely suspend plans for a $15-billion EV plant in Alliston. Real GDP is projected to grow by 0.7 per cent in 2026.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024, 2025 and 2026.
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