On Friday it will reveal how Canada’s GDP responded to the Iran war in March – National
How Canada’s economy is responding to the Iran war, particularly higher oil and energy prices, will be revealed in the upcoming GDP report set for release on Friday.
Canada’s Gross Domestic Product (GDP) shows the total value of all goods and services produced by the economy over a period of time, including the amount of money earned from selling oil. Friday’s GDP release from Statistics Canada for March will show the first full month of data since the conflict began.
This comes after the latest report showed that Canada recorded a surplus in March for the first time in six months, and the increase in exports was concentrated in gold and oil products.
Governor Tiff Macklem at the Bank of Canada gave a long-term outlook on GDP after holding interest rates at the last monetary policy meeting on April 29.
“The conflict in the Middle East will affect the composition of growth, but the impact on overall growth is expected to be small because high oil prices worldwide increase the value of our energy exports as they pressure consumers and many businesses,” he said at the time.
As of publication, US crude oil, known as WTI, was priced at around US$90 per barrel, down from a recent high of around $116 in early April, and above a low of $65 the day before the conflict began at the end of February.
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Since oil prices are notoriously volatile, forecasting economic growth using oil prices can be challenging. In addition, GDP reports include various sectors that can reduce the direct impact of higher oil prices and demand on the full report.
But the Bank of Nova Scotia released a report in March that predicted the possibility.
“Continued military actions in Iran have increased the likelihood of regional conflict and raised the possibility of future oil supply disruptions, causing oil prices to rise in early trading,” said director of Modeling and Forecasting, Olivier Gervais, at the Bank of Nova Scotia.
“As an energy exporter, Canada benefits from improved terms of trade when oil prices rise.”
Gervais’s model assumes a scenario where WTI oil remains always $10 above the base price (where prices would have been without the Iran war).
If oil prices remain at this level, Gervais predicts that Canada’s GDP will increase by 0.3 percent this year, and 0.5 percent in 2027. This report does not show exactly how much GDP will increase in the month of March.
He adds that these figures will double for each additional $10 above the base price.
At the same time, a report from Deloitte released in April explains how the Iran war could further reduce Canada’s GDP growth by 20 percent.
The report explains that while higher oil prices and Canadian oil demand may provide a small boost to GDP, other factors such as slowing business growth and consumer spending may have a negative effect.
In addition to the Iran war, the Canadian economy is already facing uncertainty from the trade war and US tariffs, and as Canada and the US intensify negotiations on the revision of CUSMA.
A statement from the Royal Bank of Canada Economics on May 22 said that its economic team expects GDP to show an increase of 0.1 percent in March compared to February. This will also be the third report for 2026, which means that the first quarter of the year will be examined as a whole.
RBC says it expects the Canadian economy to grow by 1.7 percent in the first quarter compared to the same period last year.
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