Global tensions are now seen as the top economic risk in the Bank of Canada – National survey
Political tensions are now considered a bigger risk to Canada’s economic output than trade conflicts with countries like the US, according to the latest survey data from the Bank of Canada.
This comes as the war in Iran continues after more than two months without an end, and after US President Donald Trump rejected Iran’s latest proposal to end the violence.
The central bank released the results of its Market Participants Survey for the first quarter of 2026 on Monday, which was conducted from March 25 to April 1, 2026. It showed 27 participants who are considered financial and business leaders working in banks, insurance, pension funds, asset management and research firms.
Between categories, participants were asked to select up to three risks to the Canadian economic outlook.
Eighty-two percent of respondents chose the country’s growing tensions as a risk, which was the most common among all the options given.
Meanwhile, 79 percent chose worsening trade tensions and 57 percent said they strengthened global financial conditions.
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In addition to the uncertainty of the long-term nature of the conflict, the war in Iran is causing supply disruptions and difficulties for essential goods such as crude oil, natural gas, fertilizers and other goods that often pass through the Strait of Hormuz. With the narrow shipping lane closed to most ship traffic, prices are rising around the world for things like food and fuel as supplies dwindle.
On food prices, the UN agency warned last month that the war in Iran could cause a food “catastrophe” later this year if it continues unabated.
The Bank of Canada warned in April that if oil prices continue to rise, it may be forced to raise borrowing costs in Canada to reduce inflation.
Governor Tiff Macklem at the central bank spoke to reporters in Ottawa on April 29 shortly after leaving the interest rate unchanged in Canada at 2.25 percent.
“If electricity prices rise, and especially if they remain high for a long time, there may be a need to increase the policy rate so that inflation returns to 2 percent,” said Macklem.
Iran has also targeted the energy infrastructure of the United Arab Emirates and Kuwait during wide-ranging strikes on neighboring countries that it considers aligned with US interests.
In the same survey of Market Participants for the last three months of 2025, increasing trade tensions took the top spot with 93 percent of respondents choosing, while the risk of the political environment was not among the top three reported as chosen by participants. This was followed by 43 percent of participants choosing strong global financial conditions and 37 percent choosing weak consumer spending as the top risks.
– By file from Global Uday Rana
© 2026 Global News, a division of Corus Entertainment Inc.
