-- Canada's economy "looks to be off to a solid start" in 2026 after GDP contracted in Q4 2025, TD's Marc Ercolao said Thursday. With February's print and a flash estimate for March, Q1 2026 growth is tracking around 1.7%, broadly consistent with the Bank of Canada's recently updated economic projections and its own forecast, he noted.
"How growth evolves beyond Q1 will matter more for the policy outlook than the near term momentum itself, as the Canadian economy faces significant cross currents -- most notably elevated trade uncertainty and, more recently, spillovers from the ongoing Middle East conflict," Ercolao said.
"The BoC has emphasized that these forces leave two sided risks to the outlook, and policy remains data dependent, with the Governing Council prepared to respond if growth or inflation deviates materially from expectations. That said, our base case remains that the Bank holds the policy rate steady for the remainder of the year," he added.
Canadian gross domestic product ticked higher by 0.2% month over month in February, in line with Statistics Canada's advanced guidance and market expectations. Advanced guidance calls for no growth in March, with further gains in wholesale and transportation sectors being offset by a pullback in retail trade and the mining, oil and natural gas sector, Ercolao noted.