The global economy is showing signs of resilience despite ongoing uncertainties, with the International Monetary Fund (IMF) projecting a trend-like growth of 3.1% for 2026 and an acceleration to 3.4% in 2027. This outlook defies earlier concerns of a significant slowdown, supported by solid earnings growth and consumer spending. Businesses are adapting to challenges such as tariffs and geopolitical risks by focusing on emerging demand areas like AI and related infrastructure.
In the U.S., growth is expected to reach 2.4% in 2026 and 2.6% in 2027, according to KPMG U.S. However, Canada's economic recovery is anticipated to be more gradual and bumpy, with growth at a tepid 1% this year. Trade tensions, a decline in immigration, and U.S. tariffs are weighing heavily on trade-exposed sectors, particularly in the latter half of the year.
New headwinds include market jitters over AI capital expenditure funding, higher interest rates from the Bank of Canada, and rising bond yields that could pressure the already soft housing market. Persistently high energy prices and a weak Canadian dollar are further eroding purchasing power for households and businesses.
Despite these challenges, KPMG remains cautiously optimistic about Canada's economic future. Growth is projected to rise to 1.8% in 2027 and 2.0% in 2028, driven by continued consumer spending, rising investment in AI and infrastructure, adaptation to tariffs, and a modest increase in population growth. Per capita growth is expected to improve, marking a material upturn in productivity after years of weakness.