Canada's macroeconomic framework is robust, supported by strong public finances and a well-capitalised banking sector. However, the economy faces significant headwinds from tariffs with the United States. High household mortgage debt remains another vulnerability, and high debt service costs weigh on household finances. There is also room to improve the efficiency of the tax structure. Housing affordability has been declining over recent years. Policies to boost housing supply, such as allowing higher density housing and expediting the permitting process, should be strengthened. Additional support should focus on social and affordable housing. While Canada has a comprehensive carbon pricing system that should be preserved, including the fuel charge for consumers, additional policies are needed to adapt to climate risks.These include improving risk disclosure, preventing land development in risk-prone areas, enhancing infrastructure resilience, and strengthening insurance coverage. Canada's labour productivity performance lags its peers. Boosting productivity requires a combination of policies, including rebalancing R&D support, reducing regulatory barriers in internal markets, enhancing competition and digitalisation of the economy, and fully utilising women's skills.