1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 50
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
Final domestic demand normalized from 2Q as household consumption posted a flat reading
10%
8%
6%
4%
2%
0%
1Q21
4Q21
3Q22
2Q23
1Q24
4Q24
3Q25
-2%
Final domestic demand (QoQ SAAR)
Historical avg. since 1990
Source: Statistics Canada, Bloomberg Finance LP, Scotia Wealth Management
Near-term growth outcomes will be influenced by the effectiveness of government policies aimed
at stimulating business investment, the impact of low or even negative population growth, and
the outcome of the USMCA review along with any associated uncertainties that come with it.
On the former, the Federal government passed a budget earlier last November that seeks to
shore up growth through capital investments targeting infrastructure, defense, and housing. The
budget also aims to boost business investment and productivity by lowering the cost of investing
through accelerated tax write-offs, expanded R&D credits, and incentives for clean technology,
manufacturing, and innovation. As it stands right now, firms’ investment intentions remain below
the long-term average as a greater share of businesses are reporting weaker future sales
indicators, according to the BoC’s 3Q25 Business Outlook Survey.
Businesses are planning for lower investment amid muted demand
60%
40%
20%
0%
-20%
-40%
2019
2020
2021
2022
2023
2024
2025
Future sales indicators improved
Future sales indicators unchanged
Future sales indicators worse
Investment intentions NTM
Source: BoC 3Q25 Business Outlook Survey, Scotia Wealth Management
Population growth, or the lack thereof, also warrants mention. The national population dropped
by 76k or 0.2% in 3Q25, the largest drop on record as the government tightened immigration
policies. Most of the decline can be attributed to a decline in non-permanent residents,
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