“The best that can be said about Canada’s economy in 2025 is that it likely skirted a recession, thanks to the duty-free status of USMCA-compliant goods, supportive fiscal and monetary policies, and the TSX’s blistering 28% rally,” he said.
He cautioned that “real GDP growth likely slowed to 1.7% from 2.0% in 2024,” with output up just 0.8% on a Q4/Q4 basis compared with a 3.1% surge the previous year.
Housing risks remain highly regional. “Home price risks remain contained to Ontario and British Columbia, where affordability (though improving) remains poor,” Guatieri said.
He points to a “glut of unsold condos and a surge in purpose-built rental construction” in the Toronto area, exacerbated by tighter immigration settings.
Still, he expects prices in those provinces to stabilize as long as mortgage rates stay near neutral and the jobless rate, which BMO projects to peak near 6.8%.