08:44 AM EST, 12/03/2024 (MT Newswires) -- After rising by 1.2% year over year in 2024, Canadian real gross domestic product is expected to increase by 1.7% next year and 1.9% year over year in 2026, according to Morgan Stanley.

Rate cuts will support growth in next year and 2026, stated the bank.

Morgan Stanley predicts broad acceleration across consumption, residential and non-residential investment, and exports as the effects of past rate hikes fade.

Job gains remain soft early next year but are estimated to pick up in mid-2025 as firms grow more confident, said Morgan Stanley. Stronger labor demand combines with slower labor supply to

lower the unemployment rate through mid-2026.

Business and residential investment accelerate through mid-2026

due to lower rates and stronger growth. However, by H2 2026, weaker United States growth because of tariffs and US immigration restrictions will weigh on Canada's cyclical rebound, added the bank.