Fitch affirms Canada at AA+ with a steady outlook

Canada is out of the World Cup but it keeps its near-top rating.

The full Fitch announcement.

• Fitch says Canada’s economy remains plagued by ongoing trade uncertainty and longstanding structural challenges

Fitch affirmed Canada’s long-term rating at AA+ with a stable outlook on Tuesday, and the report is a good snapshot of the Canadian macro story right now: weak growth, rising debt, but enough offsetting assets to keep the rating agencies comfortable.

The headline numbers:

• 2026 GDP growth forecast: just 0.7% (same as today’s forecast from RBC), down from three years around 2%
• General government deficit: 1.7% of GDP in 2025, seen widening to 2.4% in 2026 — right at the AA median
• Gross general government debt: 89.7% of GDP in 2025, rising to 92.1% in 2026 — nearly double the AA median of 46.3%

That debt number would normally be a problem, but Fitch gives Canada two notches of credit above its model output. The first is for the asset side of the ledger — general government financial assets are 110% of GDP, with CPP and QPP holding 36.5% of GDP in pension assets. The second is for the external position: net international investment position of 59% of GDP versus a 27.4% peer median, driven largely by Canadian pension money parked in US equities.

On growth, Fitch flags the usual suspects: trade uncertainty around the USMCA renewal (they expect it gets extended eventually), weak productivity, internal trade barriers and immigration-related pressures. Investment has stalled while everyone waits on the trade file.

The Carney angle is worth noting. Fitch acknowledges the government’s plan to lift potential growth through capex and big infrastructure projects but adds a dose of skepticism — higher productivity has been promised before and hasn’t shown up. They also don’t expect any real fiscal consolidation over the next two years, spending review or not, and warn that downside risks are high given Ottawa’s track record of revising fiscal targets.

Rating triggers to watch: a material rise in debt/GDP or a big trade shock gets you a downgrade conversation; a genuine productivity improvement or a substantial decline in debt/GDP gets you an upgrade one. Neither looks imminent.

For the loonie, this is a non-event on the day but the report underlines the structural story — Canada’s rating is increasingly held up by pension assets and foreign equity holdings rather than by growth. If the Carney investment push doesn’t deliver, the debt trajectory does the talking at the next review.