Canada faces a roughly 30% chance of entering a recession as global economic pressures intensify, according to former Bank of Canada governor Stephen Poloz.
Speaking amid rising geopolitical tensions and economic uncertainty, Poloz pointed to the ongoing conflict in the Middle East as a major risk factor. Disruptions in key النفط routes, including blockades in the Strait of Hormuz and damage to production facilities, have driven fuel prices higher and raised fears of a broader global energy crisis.
The International Monetary Fund has also issued a warning, stating that the world economy could edge close to recession if the conflict persists, highlighting “tremendous” downside risks in its latest outlook.
Poloz noted that Canada’s economic growth is currently hovering around one percent, leaving little room to absorb additional shocks. He added that the country is still adjusting to tariff policies introduced under Donald Trump, which continue to weigh on trade and business activity.
Rising energy costs are already being felt across the country, with fuel prices climbing sharply in major cities. While short-term measures such as adjustments to gasoline taxes could provide temporary relief, Poloz emphasized the need for longer-term solutions.
He suggested that expanding Canada’s conventional energy sector and strengthening its domestic defense industry could help offset some of the economic strain. However, he cautioned that these measures would take time to have a meaningful impact.
Despite the risks, Canada’s position as a major oil producer could provide some cushion compared to other economies, potentially softening the blow of a global downturn. Still, Poloz warned that economic impacts would likely vary widely across regions and sectors, creating uneven conditions for households and businesses.
While the outlook remains uncertain, much will depend on how quickly geopolitical tensions ease and whether global markets stabilize in the coming months.