Canada survived Year 1 of the second Trump presidency mostly intact economically, and fully intact sovereignly. What about Year 2? For this series, The Globe asked dozens of economists, analysts and investors to pick a chart they think will be important in 2026. Explore some of the other topics in the index below.
Spend it wisely
Sébastien Mc Mahon, vice-president of asset allocation, Industrial Alliance Global Asset Management
Budget 2025 saw the federal government use public investment to boost growth amid a trade war, but this strategy poses fiscal risks.
Canada holds a AAA credit rating from S&P Global, yet has a weaker fiscal outlook than other AAA nations due to its high gross-debt-to-GDP ratio, offset by strong pension assets. Efficient execution in 2026 is crucial: Public funds must be spent wisely and draw private investment, while government spending must be tightened. Failure could lead to a credit downgrade, reduced investor confidence and higher interest rates.
Getting out of the way
Eric Lascelles, chief economist, RBC Global Asset Management
While improving infrastructure and bolstering the country’s capital stock are priorities for Canada’s new government, surprisingly little of the push is set to come in the form of the government’s own capital expenditures.
The new budget merely envisions an extra $9-billion per year of such investments above the pre-existing trajectory – equivalent to just 0.3 per cent of GDP. Instead, the government’s main contribution is getting out of the way: streamlining project approvals via the One Canadian Economy Act passed last summer, shepherding key projects forward via the new Major Projects Office and cutting the effective tax rate on capital. It’s critical the government gets this right given the backdrop of a woeful productivity environment and diminished trade prospects.
Under pressure
Kim Shannon, founder and co-chief investment officer, Sionna Investment Management
This chart overlays the 1970s inflation wave with the current one. The similarity of the two cycles so far is both rare and striking.
At this point in the 1970s, the then-Federal Reserve chair had raised U.S. short-term interest rates and successfully subdued inflation, similar to today. So, then-U.S. president Richard Nixon pressured his Fed chair to lower short-term rates to stimulate the economy in support of his re-election campaign. But the inflation “genie got out of the bottle,” and long rates subsequently rose painfully to 15 per cent by the early 1980s.
Central banks have studied financial market history and are hoping to avoid this challenge to an economy. Today, the Fed again faces pressure from the U.S. President to lower rates for political reasons at a similar point in an inflation wave. This chart illustrates the potential challenges from inflation the current U.S. economy could face if short-term rates are materially lowered.
Room to expand
Ian Pollick, managing director, fixed income, currency and commodity strategy, CIBC Capital Markets
In most advanced economies, fiscal policy was activated in 2025 as a result of changes in U.S. trade policies. Broad-based fiscal expansion is great if it works, but dangerous if it doesn’t. Fiscal efficiency is what really matters here, because turning fiscal spending into nominal GDP growth isn’t uniform across jurisdictions. Germany, Japan and Canada appear the most able to turn fiscal dividends into real output gains, which should restrict a rise in longer-term interest rates.
In contrast, highly productive economies operating near full employment, such as the U.S., will see less bang for the buck from additional fiscal support. As a result, they could be penalized by investors’ worries about fiscal imprudence, keeping longer-dated interest rates higher. In our fiscal efficiency indicator, higher values indicate more efficiency, and vice versa. Investors should want more efficiency, as that keeps longer-term rates lower, and equities higher.
It’s a choice
David-Alexandre Brassard, chief economist, CPA Canada
Canada’s fiscal situation has deteriorated due to impaired growth resulting from American protectionism. However, the lion’s share of our increased debt comes from new long-term policy decisions highlighting that our new financial path is a choice. We are no longer aiming to grow the economy faster than our debt, evidenced by the increasing government-debt-to-GDP ratio in the next few years. The IMF has criticized the removal of that fiscal anchor in its most recent assessment.
We do have a more honest stance on deficits: They’re justified if they fund capital spending (or at least the federal’s government definition of capital spending, which has been questioned by the Parliamentary Budget Officer). The spending and saving ambitions are ample, and we’ll see them implemented and unfold in 2026.
Illustration by Matthew Billington
2026 in charts: The full series
The economy and investment, in 14 points
A guide to Year 2 of the Canada-U.S. trade war
What’s ahead for the job market and household spending
A housing-market horoscope for Canadians
Stablecoins, AI and more trends on the market's mind
Seven policy points to remember as Carney presses Canada to build big
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