Canada's Productivity Push Set to Boost Investment And Lift GDP Through 2028, Scotiabank Says

10:06 AM EDT, 10/14/2026 (MT Newswires) -- Canada's productivity drive is expected to spur business investment and support gross domestic product growth through 2028, cushioning the impact of trade disruptions with the United States, according to Scotiabank Economics in a note. Tariff-related pressures are expected to weaken exports in late-2026, but fiscal measures, increased capital spending and high commodity prices should help accelerate economic growth next year, wrote Scotiabank in the Tuesday note. The federal government's Productivity Mega-Deduction, which allows businesses to immediately expense a broad range of capital investments, is projected to increase investment by around 3% by 2028 and lift GDP by roughly 0.3%, said the bank. Higher imports of machinery and equipment will limit the initial growth boost, but stronger capital spending should gradually improve productivity and expand productive capacity. GDP growth is forecast to reach 2.1% in 2028, with investment offsetting softer consumption and unemployment holding near 6%, added Scotiabank. However, inflation risks remain skewed to the upside, with elevated oil prices expected to keep headline consumer price index above 3% in the coming quarters before easing next year and settling near 2% in 2028, said the bank. Higher diesel costs and retaliatory tariffs are also expected to fuel core inflation in 2027.