In a recent economic letter, the Business Development Bank of Canada (BDC) focused on geopolitical upheavals, demographic shifts, and the swift rise of artificial intelligence (AI), three forces expected to tangibly impact Canadian entrepreneurs over the next 12 months.
BDC anticipated seeing positive but modest growth in Canada’s economy in 2026. In response to the three key trends impacting the economy, BDC encouraged businesses to:
- Consider the three forces in their long-term growth strategies
- Learn from larger organizations’ strategies
- Invest in their infrastructure
- Train their teams
- Prepare financial projections, especially if they are exporters
- Leverage interprovincial trade simplification to diversify their partners and markets
- Be ready for changes due to the country’s aging population and slower immigration
- Adapt their offerings and business strategies, including adjusting sales cycles and snatching merger and acquisition opportunities
- Adopt useful technologies
Geopolitical uncertainty
In its January 2026 economic letter, BDC explained that international geopolitical upheavals have resulted in worldwide uncertainty and could complicate the mandatory review of the Canada–United States–Mexico Agreement (CUSMA), scheduled to formally begin in July. BDC noted that preliminary discussions between Canada and the US commenced in mid-January.
According to BDC, just like in 2025, trade and tariff tensions will remain a major force in 2026. BDC pointed out that:
- The average level of tariffs stayed at the manageable rate of 5.9 percent
- CUSMA continued to protect 90 percent of exports
- Some tariff increases, including for some wood products, were delayed until January 2027, though they were initially set to take effect in January 2026
BDC identified the following as reasons that businesses seeking to stabilize and grow their operations can be optimistic:
- Canada–China communication channels have reopened
- Canadian businesses operating nationally will benefit from simplified interprovincial trade
Demographic shifts
In its monthly economic letter, BDC highlighted three demographic changes.
First, shortages of regional workers or the types of skills required are making businesses struggle to hire staff, be less competitive, deal with higher wage costs, and see slower growth and lower-quality products and services. BDC urged entrepreneurs to consider new technologies and automation to depend less on labour.
Second, given the aging employees and owners of many small and medium-sized enterprises (SMEs), business transfers and acquisitions may help organizations grow, retain jobs and skills in Canada, and access new talent, client lists, and service offerings.
Third, given Canada’s aging population, which is driving slower demand for goods and services, the healthcare and pharmaceutical sectors, including those providing accessibility solutions for aging at home, will perform better than others. BDC noted that the tourism sector can leverage a consumer base comprising new retirees aged 65–74.
Rise of AI
In its recent economic letter, BDC acknowledged that AI adoption has increased in Canada and worldwide. However, BDC highlighted the large gap between large companies’ and SMEs’ AI utilization. BDC noted that:
- Large companies – especially in finance, logistics, and manufacturing – have already implemented advanced AI to automate processes and improve decision-making
- Costly AI tools, insufficient internal skills, and complex integration have made SMEs hold back
Next, BDC addressed the issue of digital sovereignty. BDC explained that AI infrastructure investments seeking to decrease dependence on foreign platforms and safeguard sensitive data will grow in 2026.
BDC then discussed the higher demand for engineers, cybersecurity specialists, and software developers. According to BDC, companies should be competitive to attract these employees and reallocate resources previously dedicated to repetitive, analytical, or administrative tasks to high-value activities.
Lastly, BDC noted that cyberattacks, automated disinformation, and deepfakes continue to threaten businesses’ reputation and security. BDC stressed that SMEs should invest in detection and protection systems to build customer and partner trust.