TD Economics September Forecast: Canadian GDP Upgraded to 1.0% as H2 Recovery Exceeds Expectations

According to TD Economics' Canada Quarterly Economic Forecast for September 2026, Canada's 2026 full-year GDP growth projection has been upgraded to approximately 1.0%, from the 0.7% estimated in the June provincial forecast. The upgrade reflects H2 2026 growth that is running ahead of the June baseline, driven by the combination of continued oil and gas sector strength on elevated global energy prices, recovering export performance as Canadian businesses adapt to the new trade environment, and the gradual improvement in consumer spending as the Bank of Canada's prior rate cuts work through the mortgage and credit market.

Alberta continues to be the clear provincial outperformer in TD Economics' September assessment, with the province's oil sands and natural gas sector generating strong revenues on persistently elevated global energy prices. WTI crude prices, which the Bank of Canada had projected would decline from their Middle East war-elevated levels, have remained stubbornly above $85 per barrel through Q3 2026, providing Alberta's energy sector with better-than-expected revenue performance and supporting both provincial government fiscal capacity and private sector investment and employment in the sector.

Ontario is showing signs of stabilisation in TD Economics' September update, after being the most severely affected major province by the US tariff disruption in H1 2026. The automotive and industrial manufacturing sectors, which bear the most direct exposure to US trade barriers, have not recovered their pre-tariff export volumes but have stabilised at their adjusted lower levels, and domestic Ontario consumer spending has improved as employment has held up better than the severe H1 growth slowdown might have implied. The Ontario housing market remains subdued but has also stabilised, reducing the negative sentiment drag that had been a factor in earlier 2026 quarters.

The per capita economic picture — which TD Economics had highlighted in its June report as meaningfully more positive than aggregate GDP — remains broadly positive across all provinces in September. Population growth has slowed sharply across Canada, with the aggregate labour force in several major provinces now growing more slowly than in recent years, meaning that the same economic activity generates higher per capita output. This per capita perspective is important for businesses assessing purchasing power and consumer demand in the Canadian market, where aggregate headline GDP understates the underlying income trajectory per household.

Canadian export performance has improved in H2 2026, with the most significant gains in energy exports — benefiting from elevated global prices — and in services exports, where Canadian technology, professional services, and financial services firms have continued to grow their US market presence. Goods exports in manufacturing-sensitive sectors remain below pre-tariff levels, but the decline has stabilised and businesses are reporting that their adaptation strategies — including supplier diversification, productivity investment, and alternative market development — are beginning to reduce the tariff headwind on their export economics.