Geopolitical tensions at the moment are considered an even bigger risk to Canada’s economic productivity than trade conflict with countries just like the U.S, in accordance with the Bank of Canada‘s latest survey data.
This comes because the Iran war continues to wage on after greater than two months without end, and after U.S. President Donald Trump rejected Iran’s latest ceasefire proposal.
The central bank released the outcomes of its Market Participants Survey for the primary quarter of 2026 on Monday, which was conducted from March 25 to April 1, 2026. It featured about 27 participants considered to be financial and business leaders working in banking, insurance, pension funds, asset management and research firms.
Among the many categories, participants were asked to pick up to 3 downside risks to Canada’s economic growth outlook.
Eighty-two per cent of respondents chosen increasing geopolitical tensions as a risk, which was probably the most common amongst all options provided.
Meanwhile, 79 per cent selected worsening trade tensions and 57 per cent said it was tightening global financial conditions.
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Along with the uncertainty of the conflict’s long-term outlook, the Iran war is creating supply chain disruptions and strains on essentials like crude oil, natural gas, fertilizer and other materials that normally go through the Strait of Hormuz. With the narrow shipping channel essentially closed to most container ship traffic, prices are rising worldwide for items equivalent to food and gasoline as supplies run low.
On food prices, a UN agency warned last month that the Iran war could cause a food “catastrophe” later this yr if it continues unabated.
The Bank of Canada warned in April that if oil prices proceed to climb, it could be forced to boost borrowing costs in Canada so as to cool inflation.
Governor Tiff Macklem on the central bank spoke to reporters in Ottawa on April 29 shortly after leaving the benchmark rate of interest unchanged in Canada at 2.25 per cent.
“If energy prices go higher, and particularly in the event that they stay higher for longer, there could well be a necessity to extend the policy rate to get inflation back to 2 per cent,” said Macklem.
Iran has also targeted energy infrastructure within the United Arab Emirates and Kuwait amid broader strikes on neighbouring countries it views as aligned with U.S. interests.
In the identical Market Participants survey for the ultimate three months of 2025, increasing trade tensions took the highest spot with 93 per cent of respondents making the choice, while geopolitical risks weren’t among the many top three reported as selections by participants. This was followed by 43 per cent of participants choosing tighter financial conditions globally and 37 per cent selected weaker consumer spending as top risks.
— With a file from Global’s Uday Rana
© 2026 Global News, a division of Corus Entertainment Inc.