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2026–27 Departmental Plan – Operating Context

Atlantic Canada continues to show steady economic momentum in 2026–27 despite slower population growth and ongoing tariff-related uncertainty. Average real gross domestic product growth across the region ranges from 1.2% to 1.6% in 2026, matching the average Canadian forecast of 1.3%.^{Footnote 1}  Labour market conditions have slowed following the post COVID-19 pandemic expansion, year-to-date employment growth reached 0.7%^{Footnote 2} in November 2025, and the regional unemployment rate averaged 7.6%, near its historical low and slightly above the national rate of 6.8%. Although population growth has slowed the region’s pace, pressures in the housing market have eased, with housing starts up 18% year-to-date in September.^{Footnote 3}

Economic growth in the coming years will be supported by:

• expansion of established and emerging value-added sectors, including oceans, biosciences, mining and critical minerals, aerospace and defence, clean energy and technology, and information and communications technology
• investments that advance a greener, more sustainable economy and reduce greenhouse gas emissions
• innovation, including new products, services and the adoption of advanced technologies such as artificial intelligence
• improved access to interprovincial and international markets through free trade agreements and reduced trade barriers.

Despite favourable trends, risks to business and community development persist. Geopolitical instability, extreme weather events, affordability challenges, slow business investment, labour shortages and tariff impacts continue to weigh on economic performance.

Tariffs have impacted international export growth in the region, although signs of market diversification are evident. Year-to-date exports in Atlantic Canada have declined by 1.9% over the January-September 2025 period, with most of the decline due to a 10.7% drop in exports to the United States, and to a lesser extent China (-15.0%). However, exports to the United Kingdom (51.1%), European Union (48.2%), Mexico (21.8%), Latin America (12.8%) and Southeast Asia (6.8%) rose in 2025.^{Footnote 4}

Businesses and consumers continue to face higher costs and low productivity. In the fourth quarter of 2025, firms reported persistent challenges related to rising input costs, inflation, and labour shortages.^{Footnote 5} Atlantic Canadian companies have traditionally faced challenges in securing financing, in part due to the rural nature of the region, resistance from traditional funding lenders, and risks associated with any business investment. ACOA will maintain support for Atlantic firms as they pursue growth opportunities.

Labour availability remains a significant constraint. Recent record population growth in the maritime provinces was sustained by immigration and interprovincial migrants but this has slowed impacting population growth and potential output. Year-over-year increases in Newfoundland and Labrador (0.6%), Prince Edward Island (1.6%), Nova Scotia (1.0%) and New Brunswick (1.3%) were broadly in line with the national rate (0.9%) in July 2025.^{Footnote 6} Given demographic pressures—including an aging population and persistent negative natural increase—attracting and retaining people is essential to sustaining economic momentum.