Trade Tensions Top Downside Risks to Growth: Bank of Canada Survey

The Bank of Canada's Market Participants Survey shows that trade tensions are a major concern for financial market participants, with 96% naming it as a top downside risk to growth. Tightening global financial conditions ranked second at 65%, followed by geopolitical risk at 42%. On the upside, 92% pointed to an easing of trade tensions.

The survey also found that respondents expect the central bank to hold its policy rate at 2.25% through the end of 2026 before lifting it to 2.75% by the close of 2027. Median real GDP growth was forecasted at 1.3% this year, recovering to 1.9% by the end of 2027.

Almost all participants (96%) saw the economy running below its potential, and the median odds of a recession within a year were estimated at 25%. On inflation, the median forecast eased from 2.6% at the end of 2026 to 2.1% a year later.