A former Bank of Canada governor has warned that Canada faces a nearly 30 per cent chance of entering a recession as global economic pressures continue to mount.
Stephen Poloz told CTV that the Canadian economy is already growing slowly, at about one per cent, while dealing with the impact of U.S. tariffs and rising energy prices linked to the conflict in the Middle East.
“It’s not about somehow avoiding all of that. Then on top of that, we’ve got this oil shock,” Poloz said.
The war in the region, including disruptions in the Strait of Hormuz, has driven up fuel prices and raised fears of a broader energy crisis.
The International Monetary Fund also warned this week that the global economy could be close to recession if the conflict continues.
Poloz said governments could provide short-term relief through measures such as fuel tax changes, but long-term solutions were needed.
“Can we do some offsets? Like, for example, the government changes the tax structure on gasoline. That’s a mitigator, a short-term type of offset. But really, for the Trump tariffs, we need to find a replacement, as opposed to an offset.”
He said Canada’s role as a major oil exporter may mitigate the impact, although disparities across sectors and regions will remain significant.
