![\"Derek](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/04\/Derek-Burleton.png\")
Derek Burleton, TD Economics<\/p>\nCanada\u2019s economic picture may not be all that bright, but given the challenges of recent years, it could be much worse.<\/p>\n
Since the pandemic began six years ago, the economy has been anything but stable. Pandemic-era low interest rates fuelled a surge in spending, which helped drive inflation higher and, in turn, pushed interest rates sharply upward.<\/p>\n
Derek Burleton, TD Economics<\/p>\n
Just as inflation and interest rates began to settle, trade tensions with Canada\u2019s largest trading partner resurfaced. Now, higher fuel prices driven by conflict in the Middle East are fuelling renewed inflation concerns, while the growing impact of AI is casting a shadow over the labour market.<\/p>\n
And yet, through it all, Canada\u2019s economy seems relatively unscathed, according to TD vice president and Deputy Chief Economist Derek Burleton.<\/p>\n
\u201cWe are dealing, as an economy, with a series of shocks,\u201d he said at a mortgage industry event in Toronto. \u201cYet, our economy has shown some resilience.\u201d According to recent data, consumer spending ticked up<\/a> by a 0.8% in February, with employment holding relatively steady<\/a>, according to Statistics Canada. While gas prices remain high, Burleton says the impact is being offset by stronger gains in the oil and gas sector.<\/p>\n He agrees with most Big Six forecasts calling for a steady 2026. But if the Bank does move, he sees cuts as more likely than hikes.<\/p>\n \u201cNext week is a slam dunk, no rate change, two-and-a-quarter, the question is what happens next,\u201d he says. \u201cEven pre-war we expected to stay at 2.25% and ride that out, and I do believe if the bank is going to move off it, it\u2019s more likely they cut rates than raise.\u201d<\/p>\n Burleton explains that post-pandemic inflation was driven by sky-high demand and a series of supply shocks, which forced the Bank of Canada<\/a> to move aggressively in raising rates. This time, he said, inflation is being driven by a single supply-side event. Unless the war drags into the summer, he doesn\u2019t expect the Bank to step in.<\/p>\n \u201cI think the bar for a rate hike is relatively high,\u201d he says. \u201cIf the shock proves bigger, oil prices grow higher, energy prices impact demand in provinces like Ontario more than expected, then they\u2019ll have to adjust downward.\u201d<\/p>\n The Canadian dollar inches up<\/p>\n Canada\u2019s resilience may be most evident in its currency, which held relatively steady over the past year and strengthened in April. \u201cIt\u2019s a very nuanced story in Canada, but I am cautiously optimistic, and I think the Canadian dollar\u2019s strength reflects that,\u201d Burleton says.<\/p>\n One factor keeping the dollar relatively stable is foreign direct investment, which dropped significantly on the other side of the border last year, but \u201csoared\u201d here at home.<\/p>\n \u201cWe\u2019re seeing strength in some of the pension flows into Canada,\u201d Burleton says. \u201c[Prime Minister Mark Carney] has been doing his best running around trying to generate interest in Canada, focusing on our strengths in minerals and oil and other areas, so we\u2019re starting to see that play out.\u201d<\/p>\n Drop in employment offset by a drop in immigration<\/p>\n The job market has also remained relatively resilient, which Burleton attributes to a pullback in immigration<\/a>. After several years of steady increases, Canada\u2019s population declined<\/a> last year for the first time since Confederation.<\/p>\n \u201cThe silver lining of that is with fewer people flooding into the job market, which drove up the unemployment rate, that tap is turned off, so here we are in a very stable unemployment rate environment,\u201d he says. \u201cUsually, you need strong job growth to see unemployment come down, but not in this environment.\u201d<\/p>\n Though the job market has experienced some challenges as of late, in part due to AI-driven job displacement, its impact has been relatively muted.\u00a0<\/p>\n \u201cThe AI-driven push is not really showing hard-core up in the data, but I imagine it will at some point,\u201d Burleton says. \u201cAt this point we\u2019re kind of wondering how much disruption there will be versus transformation, versus just making people more efficient. I think it\u2019s going to be a mix of everything.\u201d<\/p>\n Higher gas prices hit consumers, boost producers<\/p>\n Another major point of economic uncertainty is the ongoing conflict in the Middle East, which has disrupted the flow of resources and driven up fuel costs around the world. While the supply shock might be causing some pain at the pumps, Burleton says oil, gas and resource producers are seeing higher profits and making big investments, which is having a positive impact on employment and tax revenue.<\/p>\n \u201cOil prices are certainly going to hit Ontario as a consuming province, but they\u2019re offset by Alberta and other oil producing provinces,\u201d he says. \u201cThe Federal Government also benefits from higher [tax] revenue, which they redistribute through a grocery GST credit<\/a>, or a temporary tax reduction for energy<\/a>.\u201d<\/p>\n The main risk to the Canadian economy is that the conflict drives up production and transportation costs for imported goods. Burleton, however, doesn\u2019t expect it to last long enough for that to materialize.<\/p>\n \u201cThe rule of thumb is that an oil shock like this has to last three to six months before that big impact on underlying prices,\u201d he says. \u201cWe think by early May there will be some kind of diplomatic solution, and if that\u2019s the case oil will peak and begin to drop.\u201d<\/p>\n With duelling blockades in the Strait of Hormuz impacting the economies of all parties involved, Burleton said there is little appetite to let the conflict drag on. \u201cIf we get another round of conflict and the strait remains closed well into May, then you\u2019re dealing with a much more severe outcome,\u201d he warns. \u201cNot a recession, just weaker growth and higher inflation.\u201d<\/p>\n Has the housing market reached a bottom?<\/p>\n One area where Canada hasn\u2019t shown the same resilience is housing, particularly in Ontario and even more so in the GTA, where prices continue to fall and sales remain subdued.<\/p>\n Burleton said the correction has followed a similar path to the city\u2019s last major downturn in the 1990s, which lasted more than seven years. Four years after prices began falling in 2002, he believes the GTA is now on the cusp of a gradual recovery.<\/p>\n \u201cCondo inventories are still high, and it\u2019s still got to come down quite a bit, and that\u2019s going to be the story over the next year and into 2027,\u201d he said. \u201cBut I do see transactions picking up in the second half of the year, prices stabilizing as the 2027 story, broadly in the GTA and Ontario, and then developers [building again] as a 2028 story.\u201d<\/p>\n Burleton\u2019s bullishness on a housing market recovery is due to the high levels of immigration seen in the years leading up to the downturn.<\/p>\n \u201cIt takes time for immigrants to jump into the housing market, and I think that will start to happen,\u201d he says. \u201cEven though immigration has been shut off, past immigration will show up in the form of pent-up demand.\u201d<\/p>\n Burleton says the housing situation in Ontario has proven to be more of a gradual correction than a full-blown crisis, at least from a macroeconomic standpoint, though he acknowledges some in the industry might disagree.<\/p>\n \u201cIt\u2019s not ideal, but [the market was] too hot, something had to give, the bad side is it\u2019s taking longer and we\u2019re still not there yet,\u201d he says. \u201cI think the worst of it is probably behind us, we\u2019re kind of scraping along the bottom on a longer-term basis, and I think when you come down to it, we\u2019re looking at a six-year correction in the resale market.\u201d<\/p>\n When the market does bounce back, Burleton says it likely won\u2019t be driven by investors, who may be too spooked to return, but by first-time and move-up buyers waiting on the sidelines for prices to bottom out.<\/p>\n The renewal shock that never materialized<\/p>\n One final example of the country\u2019s economic resilience is in the renewal market, where many forecasters warned Canadians were in for a major shock.<\/p>\n \u201cThis was going to tank the Canadian and Ontario economy, yet we\u2019ve managed to avoid catastrophe,\u201d Burleton said. \u201cThe economy has been able to weather it partly because renewals happened over time, partly because incomes grew.\u201d\u00a0<\/p>\n Despite the many external shocks to the economy in recent years, Burleton says the macroeconomic picture is much brighter than many would expect.<\/p>\n Assuming the war in Iran doesn\u2019t drag on long enough to put inflationary pressure on Canada, Burleton is confident that interest rates will remain steady through 2026, and that if there is any movement, it will be downward, not up.<\/p>\n \u201cIn an economy where the population is growing, an economy where housing has stopped, in an economy where trade is adjusting, that\u2019s about as good as we can do,\u201d he says. \u201cIt\u2019s about as resilient as we could be given the structural constraints on economic growth.\u201d\u00a0<\/p>\n Visited 3 times, 3 visit(s) today<\/p>\n Bank of Canada<\/a> bank of canada forecast<\/a> bank of canada rate forecast<\/a> BoC<\/a> BoC rate forecast<\/a> Derek Burleton<\/a> rate cut forecasts<\/a> td<\/a><\/p>\n Last modified: April 24, 2026<\/p>\n","protected":false},"excerpt":{"rendered":"Canada\u2019s economic picture may not be all that bright, but given the challenges of recent years, it could…\n","protected":false},"author":2,"featured_media":627078,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":["post-627077","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/627077","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=627077"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/627077\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/627078"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=627077"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=627077"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=627077"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Bank](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/04\/BoC-rate-forecasts-2026-April.jpg\")
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