Canada faces roughly a 30 per cent chance of entering a recession, according to former Bank of Canada governor Stephen Poloz, who says mounting global pressures are increasing risks for the national economy.
Poloz pointed to a combination of weak domestic growth, ongoing trade disruptions tied to U.S. tariffs, and rising energy costs caused by conflict in the Middle East as key reasons for concern. He noted Canada’s economy is currently growing at only about one per cent, leaving little room to absorb new shocks.
One of the biggest threats comes from instability in the Strait of Hormuz, where blockades and attacks have disrupted energy markets. Because a major share of the world’s oil supply passes through the region, any interruption can quickly push up fuel prices worldwide.
The International Monetary Fund has also warned that the world economy could move close to recession if the Middle East conflict continues, describing the downside risks as severe.
Poloz said Canada may be slightly better positioned than some countries because it is a major oil producer and net exporter. Higher oil prices can generate more revenue for parts of the Canadian economy, especially energy-producing provinces.
However, he cautioned that those benefits would not be shared evenly. While some sectors could gain, others — including households facing higher living costs and industries exposed to trade pressure — could struggle. In practical terms, that means some parts of Canada may do relatively well while others feel significant economic pain.
He suggested governments may be able to provide temporary relief through measures such as fuel tax adjustments, but said longer-term solutions require strengthening Canada’s economy. That could include expanding domestic industries, diversifying trade and building more self-reliance in strategic sectors.
For everyday Canadians, a recession would typically mean slower hiring, weaker business investment and greater financial pressure from rising costs. But Poloz’s forecast is not a certainty — it is a risk estimate, meaning recession is possible, not guaranteed.
The key factors to watch in the coming months will be global energy prices, international conflict developments, trade negotiations and how quickly Canada’s economy can build momentum.