Risk of recession in 2026 seen as ‘low’: IG Wealth report

Manitoba investors — and Canadians at large — will benefit from Bank of Canada rate cuts and new government spending in 2026, according to a report from IG Wealth Management.

The Winnipeg-based company’s 2026 Market Outlook forecasts economic growth through, in part, government spending on housing and infrastructure.

It’s also anticipating a 25-basis point drop in the Bank of Canada’s key policy rate in March, which would lower interest rates across the country.

“Usually for the full impact of rate cuts to be felt through the economy, it takes about a year to a year-and-a-half,” said Philip Petursson, IG Wealth Management’s chief investment strategist. “Canada will continue to benefit from the rate cuts … enacted in 2025.”

The central bank has dropped its policy rate a full percentage point this year.

IG’s report came out Thursday. It labelled the risk of a recession in 2026 “low” and encouraged fundamental-driven management instead of headline-driven management.

The S&P 500 fell between February and April, following U.S. President Donald Trump’s inauguration and mass launch of tariffs. It has since rebounded.

“Markets don’t hate tariffs, they hate uncertainty,” IG’s report reads.

Artificial intelligence could continue to bolster economic growth, the report states.

“We could be in the early stages of an AI bubble,” Petursson said. “You never actually know at what point you’re in a bubble until the very, very end — and the end might not even materialize.

“If AI continues to prove itself as a very, very useful tool in our daily lives … I think that’s a good thing down the road.”

From a general economic perspective — “regardless of where we might be on this AI journey” — companies are doing better, Petursson said.

Public-sector spending and the weather, which affects agriculture, will likely have a greater impact than AI and lower interest rates in Manitoba, said Fletcher Baragar, a University of Manitoba economics professor.

“That continuation of that uncertainty, I think, is going to continue,” he said. “I feel a little more wary, a little more cautious (than IG).”

IG Wealth Management is predicting a “wealth effect” wave in 2026, similar to 2025, where investors saw equity gains.

gabrielle.piche@winnipegfreepress.com