Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeNewsEconomyGeopolitical risks trump trade tensions as biggest threat to Canadian economy, Bank of Canada survey findsLatest central bank survey of business and financial leaders came after start of war in IranLast updated 5 days ago You can save this article by registering for free here. Or sign-in if you have an account.A container ship sits at anchor in the Strait of Hormuz off Bandar Abbas, Iran. Geopolitical events like the conflict in the Middle East are seen as a rising risk to Canada's economy. Photo by Amirhosein Khorgooi/ISNA via APIncreasing geopolitical risk surpassed rising trade tensions as the top downside threat to the Canadian economy, according to the Bank of Canada’s latest survey of business and financial leaders across the country.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe central bank’s first-quarter Market Participants Survey, released on Monday, gauged the economic outlooks of 28 financial market participants from March 25 to April 1. Participants included dealers and banks, asset and pension fund managers, insurers and researchers.When asked to identify up to three downside risks to Canada’s economic growth, 82 per cent of respondents put geopolitical risks on their list, while 79 per cent and 57 per cent of respondents listed increasing trade tensions and tightening global financial conditions, respectively.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againMeanwhile, 86 per cent of survey participants listed easing trade tensions as a top upside risk to Canada’s economy. Fifty-seven per cent of respondents identified a larger-than-expected fiscal stimulus as a top upside risk, while 43 per cent of respondents listed higher commodity prices and decreasing geopolitical risks.In the previous survey, which was released in February and showed sentiments from the fourth quarter of 2025, the 30 participants identified increasing trade tensions, tightening global financial conditions and weaker consumer spending as the top downside risks. That survey was conducted prior to the Iran war, which started in late February.Monday’s survey results come after the central bank’s latest Monetary Policy Report said the conflict in the Middle East, along with U.S. tariff measures and the upcoming Canada-United-States-Mexico Agreement review, have added significant uncertainty to the outlook for the Canadian economy.Bank of Canada governor Tiff Macklem previously told reporters that, while the Canadian economy is projected to experience some growth in the next three years, the outlook is heavily dependent on the outcome of trade negotiations with the U.S. and the severity of the Iran war.Macklem has also repeatedly said monetary policy needs to be “nimble” and that the central bank may have no choice but to hike its policy interest rate if inflation and higher energy prices persist.“There’s no set timeline here. It really depends on the conditions. It’s all going to depend on what we see,” Macklem told reporters at a news conference on April 29.Monday’s survey results were also published almost two weeks after federal Finance Minister François-Philippe Champagne tabled the spring economic update, which projects a $66.9-billion deficit for the 2025-2026 fiscal year instead of the $78.3-billion deficit that was projected in the fall budget last November.Market participants were also asked about the possibility of a recession and their median expectations put the chances of one over the next six months at 25 per cent, up from the 20 per cent in the last survey but lower than the 38 per cent cited in the first quarter of 2025. A recession is defined as two consecutive quarters of contracting economic growth.The 25th percentile of responses placed the odds of a recession over the next six months at 10 per cent, compared with the 25 per cent in the same period last year. Meanwhile, the 75th percentile assessed the probability of a recession at 35 per cent, compared with 50 per cent a year ago.The median GDP growth forecast was 1.6 per cent growth year-over-year in 2026, rising to 1.9 per cent by the end of next year.On the inflation front, median expectations put the rate at 2.6 per cent at the end of 2026. The most recent consumer price index report pegged headline inflation at 2.4 per cent. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.