Canada has 30% chance of entering recession: former BOC head

Added: 2026-05-05

[00:00:00]How would you qualify the risk of a recession in Canada right now? Like how would you characterize it?

[00:00:05]Well, I'd say we're we're kind of in that sort of 30% kind of zone that we might fall into recession. I think growth is really only around 1%.

[00:00:15]Uh and so we're still digesting the Trump tariffs, which puts downside risk into that 1%. Um and so it's not about uh somehow avoiding all that. Then and on top of that we've got this oil shock.

[00:00:30]Can we do some offsets? Like for example, the government uh changes the tax structure on the gasoline. That's a a mitigant. A short-term kind of offset.

[00:00:40]But really for the Trump tariffs, what we need is to find replacements as opposed to offsets. What's the difference? Well, the difference is uh a policy could be like let's expand fiscal policy like the US is doing now. Very, very forceful ex- fiscal expenditures. Why is why the US economy looks pretty good despite all the negativities around tariffs, a housing sector that's flat on its back. Households are basically in recession in the United States. So, it looks okay, but because there are offsets.

[00:01:13]Uh in our case, you know, we can have offsets that can go temporarily, but you can't permanently offset the damage from these things. And so you need to work harder on replacements. And that's things like, you know, expanding the conventional energy sector.

[00:01:29]Okay? Or perhaps uh expanding the defense of homegrown defense industry or or going with critical minerals, a brand new kind of space, which is very underdeveloped and there's room to grow there. Those are the kinds of things you can do to replace activity that's being lost or damaged by either Trump's tariffs or by a long-term oil shock.