After a “turbulent” 2025, the
Canadian economy
is
poised for modest growth
in the first quarter of 2026 and throughout the year, according to the latest Main Street quarterly report by the
Canadian Federation of Independent Business
(CFIB).
The report, released Thursday, forecasts 3.4 per cent growth in
Q1 2026
, following estimated growth of 0.6 per cent in the fourth quarter of 2025.
After a contraction in the second quarter of last year and a rebound in the third, December’s estimate means year-over-year growth slowed to 0.9 per cent, while
overall GDP growth
settled at 1.7 per cent in 2025, up from 1.6 per cent in 2024.
“Looking ahead, GDP growth is expected to accelerate in the first quarter of 2026,” CFIB said in its report.
GDP growth “remains relatively resilient given persistent geopolitical tensions and global trade uncertainty,” the report said.
While total inflation is close to the Bank of Canada’s target, the CFIB noted that inflation dynamics ultimately depend on those persistent issues.
The
Consumer Price Index
(CPI) rose to 2.2 per cent year over year in the fourth quarter of 2025 and is expected to edge up slightly to 2.3 per cent in the first quarter of 2026, it said.
In partnership with the consulting firm AppEco, CFIB develops early short-term economic forecasts of key macroeconomic indicators using CFIB’s business outlook survey. The group is Canada’s largest association of small and medium-sized businesses with 100,000 members across industries.
The Main Street report said private investment in Canada steadied in the fourth quarter despite the effects of lingering uncertainty on business plans. Year on year, private investment declined by 1.2 per cent, however the CFIB expects investment to recover by 3.5 per cent in the first quarter.
“It’s encouraging to see it slightly rebounding,” it said, adding that small businesses are adapting to the new trade reality.
If uncertainty eases, private investment would recover even further, said the CFIB, but
bold policy changes
are needed, including a reduction of taxes and red tape and removal of internal trade barriers.
It said the
private sector job vacancy rate
in the fourth quarter of 2025 remained unchanged at 2.8 per cent, representing 387,600 unfilled positions.
Despite the evidence of Canadian economic resilience, the CFIB said that its analysis of business dynamics paints “a troubling picture.”
It said Canada’s economic pulse depends on a healthy private sector, and can’t keep losing businesses without new ones entering the market.
“This is a wake-up call for policymakers to create a stronger and more competitive economic environment,” it said.
• Email: dpaglinawan@postmedia.com
Canadian economy expected to recover in Q1 after turbulent 2025, report says
2026-01-16 20:56:39
