The way in which that Canada’s economy reacted to the Iran war, particularly from higher oil and energy prices, will change into clearer within the upcoming GDP report set for release on Friday.
Canada’s Gross Domestic Product (GDP) shows the whole value of all goods and services an economy produces in a given period, which incorporates the sum of money generated from selling oil. Friday’s GDP release from Statistics Canada for March will show the primary full month of information for the reason that conflict began.
This comes after a recent report showed Canada recorded a trade surplus in March for the primary time in six months, with the spike in exports concentrated in gold and oil products.
Governor Tiff Macklem on the Bank of Canada provided a long-term outlook on GDP after holding rates of interest on the last monetary policy meeting on April 29.
“The conflict within the Middle East will affect the composition of growth, however the impact on overall growth is anticipated to be small because higher global oil prices increase the worth of our energy exports whilst they squeeze consumers and plenty of businesses,” he said on the time.
As of publication, U.S. crude oil, generally known as WTI, was priced at around US$90 per barrel, which is down from a recent high of nearly $116 in early April, and above the low of about $65 the day before the conflict began at the top of February.
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Since oil prices are notoriously volatile, predicting economic growth using the worth of oil may be difficult. On top of that, GDP reports encompass a wide selection of sectors that might minimize the direct influence higher oil prices and demand have on the total report.
However the Bank of Nova Scotia released a report in March that forecast what could occur.
“Ongoing military actions in Iran have increased the likelihood of broader regional conflict and raised the probability of future oil supply disruptions, pushing oil prices higher in early trading,” said director of Modelling and Forecasting, Olivier Gervais, on the Bank of Nova Scotia.
“As a net energy exporter, Canada advantages from an improvement in its terms of trade when oil prices rise.”
Gervais’ model assumes a scenario where WTI oil stays consistently $10 above a baseline price (where prices would likely have been outside of the Iran war).
If oil prices were to remain at this level, Gervais predicts Canada’s GDP would increase by 0.3 per cent this 12 months, and 0.5 per cent in 2027. The report doesn’t indicate specifically how much GDP would rise within the month of March.
He adds that these figures would double for every additional $10 above the baseline amount.
At the identical time, a report from Deloitte released in April describes how the Iran war could also push down Canada’s GDP growth by as much as 20 per cent.
The report explains how though higher oil prices and demand for Canadian oil may provide a modest boost to GDP, other aspects like slowing business growth and consumer spending could create a negative effect.
Besides the war in Iran, Canada’s economy is already grappling with uncertainty from the trade war and U.S. tariffs, and as Canada and the U.S. intensify talks towards the review of CUSMA.
An announcement from Royal Bank of Canada Economics on May 22 said its team of economists expect GDP to indicate a rise of 0.1 per cent in March in comparison with February. This may even be the third report for 2026, which suggests the primary quarter of the 12 months will likely be assessed as a complete.
RBC says it expects the primary quarter saw Canada’s economy grow by 1.7 per cent in comparison with the identical period last 12 months.
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