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The way that Canada’s economy reacted to the Iran war, particularly from higher oil and energy prices, will become clearer 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 an economy produces in a given period, which includes the amount of money generated 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 a recent report showed Canada recorded a trade surplus in March for the first time in six months, with the spike in exports concentrated in gold and oil products.
Governor Tiff Macklem at the Bank of Canada provided 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 higher global oil prices increase the value of our energy exports even as they squeeze consumers and many businesses,” he said at the time.
As of publication, U.S. crude oil, known as WTI, was priced at around US$90 per barrel, which is down from a recent high of nearly $116 in early April, and above the low of about $65 the day before the conflict began at the end of February.
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Since oil prices are notoriously volatile, predicting economic growth using the price of oil can be challenging. On top of that, GDP reports encompass a wide range of sectors that could minimize the direct influence higher oil prices and demand have on the full report.
But the Bank of Nova Scotia released a report in March that forecast what could happen.
“Ongoing military actions in Iran have increased the likelihood of broader regional conflict and raised the probability of future oil supply disruptions, pushing oil prices higher in early trading,” said director of Modelling and Forecasting, Olivier Gervais, at the Bank of Nova Scotia.
“As a net energy exporter, Canada benefits from an improvement in its terms of trade when oil prices rise.”
Gervais’ model assumes a scenario where WTI oil stays consistently $10 above a baseline price (where prices would likely have been outside of the Iran war).
If oil prices were to stay at this level, Gervais predicts Canada’s GDP would increase by 0.3 per cent this year, and 0.5 per cent in 2027. The report does not indicate specifically how much GDP would rise in the month of March.
He adds that these figures would double for each additional $10 above the baseline amount.
At the same time, a report from Deloitte released in April describes how the Iran war could also push down Canada’s GDP growth by as much as 20 per cent.
The report explains how even though higher oil prices and demand for Canadian oil may provide a modest boost to GDP, other factors like slowing business growth and consumer spending could create a negative effect.
Besides the war in Iran, Canada’s economy is already grappling with uncertainty from the trade war and U.S. tariffs, and as Canada and the U.S. intensify talks towards the review of CUSMA.
A statement from Royal Bank of Canada Economics on May 22 said its team of economists expect GDP to show an increase of 0.1 per cent in March compared to February. This will also be the third report for 2026, which means the first quarter of the year will be assessed as a whole.
RBC says it expects the first quarter saw Canada’s economy grow by 1.7 per cent compared to the same period last year.
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