Canadian bank executives have been moaning about challenging conditions for some time, even as profits marched higher in 2015. Finding growth in 2016, though, is going to be tougher.

From a dismal Canadian economy and struggling energy producers, to low interest rates and a potential housing bubble, to increased regulatory pressure and the rise of nimble financial technology companies, bankers won't exactly be coasting on ideal conditions.

True enough, it is hard to see their pain right now. Total bank profits for the Big Six rose to $34.4-billion in 2015, according to Bloomberg, up nearly 5 per cent from the previous year. But the hurdles are getting bigger.

The banks' fortunes tend to reflect the Canadian economy, since economic activity drives mortgages, loans and capital markets activity. Yet, the economy is sputtering.

The Bank of Canada has tried to help things with interest rate cuts, but low rates are compressing the margins that banks make on loans. At Toronto-Dominion Bank, for example, net interest margins slumped to an average of just 2.05 per cent in 2015, the lowest in recent years and down from 2.35 per cent in 2010.

Conditions don't look any better up close. Bubble or no bubble, the housing market has attracted the attention of the federal government and regulators, which want to cool some urban markets with new rules on down payments and capital requirements. The top bank regulator, the Office of the Superintendent of Financial Institutions, will hold consultations on its proposed changes in 2016.

The energy market is another problem. Low crude oil prices are pummelling producers, leading to concerns about rising defaults on bank loans. This issue didn't turn ugly in 2015, after the price of oil fell below $50 (U.S.) a barrel – but oil is now below $40.

However, the outlook isn't all gloomy. Although fintech competition is on the rise, the banks are taking the threat seriously by establishing relationships with outside firms and developing their own in-house technology talent, leading to one of the most remarkable eras for financial innovation.

As well, the banks aren't confined to their home turf. Royal Bank of Canada, TD and Bank of Montreal have substantial operations in the United States, where the economy is considerably stronger. Canadian Imperial Bank of Commerce wants to expand stateside, and Bank of Nova Scotia has a big exposure to Latin America.

Add it all up and you can say this: 2016 won't be dull.

-David Berman

Canada's battered oil patch faces another grim year in 2016 as U.S. and global crude prices hover at severely depressed levels with few signs of recovery on the horizon.

Several forecasters have chopped their outlook for prices, foreshadowing deeper cutbacks in an industry already rife with suspended or reduced dividends, miserly budgets and job losses that number in the tens of thousands.

The year ended with the Organization of Petroleum Exporting Countries again refusing to rein in production to accommodate the expected return of Iran to global markets, driving U.S. and international oil prices down to multiyear lows.

Investors fled for the exits. The TSX energy subindex has plunged by more than 50 per cent since the downturn began in mid-2014. Moody's Investors Service said it now expects West Texas intermediate (WTI) oil to average $40 in 2016, weakening credit metrics at even the most financially resilient companies.

Cash-poor Alberta is forecast to run a $6.1-billion (Canadian) deficit as revenues shrink, a sharp reversal after years in the black. Companies are also grappling with new carbon constraints and awaiting results of the province's review of energy royalties.

Analysts expect the industry's austerity binge to accelerate as high-cost producers struggle to bring expenses in line with rapidly dwindling cash flows. The Bank of Canada forecasts oil-patch investment levels will plummet another 20 per cent in 2016 after falling by 40 per cent in 2015.

Like their U.S. peers, Canadian operators have played a role in the price crash. A weak loonie and lower costs for materials and labour enabled some companies to forge ahead with expansions, adding supplies to already saturated global markets.

To be sure, some analysts believe conditions will steadily improve as demand for cheap crude grows and the boom in U.S. shale output begins to ebb.

"We do not think that it will get much worse than it already has," FirstEnergy Capital Corp. analyst Martin King told clients. Still, he lowered his 2016 outlook for WTI to $49.75 (U.S.) per barrel – well under levels needed to support new bitumen projects.

There are new fears that U.S. production will test onshore storage limits, pointing to another possible downdraft even as U.S. legislators move to lift a decades-old ban on exports.

Citibank analysts led by Ed Morse say WTI may have to fall to the high $20s to significantly dent production levels. "It remains unlikely that key OPEC producers are about to blink just as it remains unlikely that demand will rise suddenly because of even lower prices," they said.

-Jeff Lewis in Calgary

The manufacturing sector will begin 2016 much the way it began 2015 – with the expectation that it will be one of the bright spots in the Canadian economy, fuelled by a weak Canadian dollar and a strong U.S. economy that should give a big boost to Canada's non-energy exports.

"Canadian manufacturers are set up with the pre-conditions for a very good year," said Peter Hall, chief economist at Export Development Canada.

But the sector never quite lived up to that same promise in 2015. While some pockets did, indeed, enjoy strong export growth, manufacturing sales over all were down nearly 4 per cent year to date in October (the latest data available).

The sector has been suffering the effects of the deep declines in resource prices, taking a particularly big bite out of manufacturers of petroleum and metal products. But even excluding those goods, manufacturing sales were down 1 per cent year to date – a testament to how much of the resource slump is spilling over to other parts of the economy that supply the country's big resource sector.

"It's really a tale of two types of supply chains," said Jayson Myers, chief executive officer of Canadian Manufacturers & Exporters, the sector's leading trade group. The outlook for exports of non-energy manufactured goods looks strong heading into 2016. But suppliers to the depressed resource sectors face another difficult year; the Bank of Canada predicts that the energy sector will trim investment by another 20 per cent in 2016, on top of the estimated 40-per-cent plunge in 2015.

"We've got a lot of manufacturers supplying the energy sector," Mr. Myers said. He noted that the Alberta oil sands alone procure up to $30-billion a year of Canadian-manufactured goods. The dramatic slowdown in investment has put numerous projects on hold, killing new business for many suppliers.

But outside the resource sector, Mr. Hall said strengthening U.S. demand should be the big story.

He noted that so far, the weakness in the Canadian dollar has helped many manufacturing exporters simply because it translates to higher prices for them, once their U.S. sales are converted back into Canadian currency. (For example, auto sector exports surged 13 per cent year to date in October, but on a volume basis, they were down 1.2 per cent.) But as the U.S. economy continues to gain momentum in 2016, "we're going to see a lot more of it driven by real volume gains," he said.

Still, some economists caution that Canadian manufacturers can't count on a U.S. resurgence the same way they have in past recoveries. Canada's command of U.S. market share has been substantially eroded over the past decade, displaced by lower-cost competitors from the likes of Mexico and China, and Canada's manufacturing capacity took a serious hit in the Great Recession.

"Canada's manufacturers still face structural competitive challenges as the U.S. economy continues to diversify trade away from Canada," said Merrill Lynch economist Emanuella Enenajor.

-David Parkinson

Shortly before Christmas, one of Calgary's largest and most established real estate brokerages became the latest in a long line of casualties of collapsing oil prices in Alberta.

In what could be a sign of things to come in the province's housing market, Royal LePage Foothills announced it was closing its doors, a victim of rising costs and a drop in home sales in the region.

"The issue of having multiple offices in this economy shows the model was not viable," said Ted Zaharko, who has owned the franchise for more than two decades. "No time was a good time when you consider the years I put into this business, but the time came to do what I had to do."

The Canadian housing market will likely face its most important test since the global financial crisis in 2016 as low oil prices continue to weigh on Alberta and Saskatchewan while new down payment rules from Ottawa are expected to take some heat out of Ontario and B.C.

The slowdown will be even more noticeable because the housing market is coming off one of its best years on record, surprising many analysts who had predicted a soft landing in 2015.

Most housing market forecasters expect growth to slow dramatically in 2016. The Canadian Real Estate Association forecasts that national home prices will increase just 1.4 per cent in 2016, compared with more than 7 per cent in 2015. The market is already showing signs of stress, with average prices outside of Toronto and Vancouver falling by nearly 5 per cent for the year.

"The Canadian real estate market is already in correction mode," wrote National Bank of Canada economist Krishen Rangasamy.

Much of the pain has come from the oil-dependent Prairies. But new down payment rules from Ottawa, which kick in on Feb. 15, should only add more cold water to the market.

Mortgage rates are also expected to increase modestly over the next two years. That will mean as many as 750,000 homeowners who are set to renew their mortgages will see their monthly payments increase, according to a study by the Mortgage Professionals of Canada. About half of those borrowers can expect to pay an extra $100 or more a month.

Not everyone is convinced that 2016 will be a turning point for housing. Even as he prepares to shut down his brokerage, Mr. Zaharko says Calgary's housing market is performing better than expected, with much of the pain limited to the market for high-end homes. "The market was surprising to many people in the strength it showed," he said.

-Tamsin McMahon

Retailers are bracing for a year of fast-paced change that could hit their bottom lines even as they raise some prices.

A weak Canadian dollar will push up some import prices, although consumer resistance may force some merchants to swallow the added currency cost. At the same time, new luxury players will expand in Canada and help shake up that market amid the rise of e-commerce and shrinking physical stores. And 2016 will bring more pain for retailers in oil-squeezed provinces, particularly Alberta.

"I wish that oil prices hadn't fallen – I wish that the economy in Alberta was a little stronger," said David Russell, co-owner of upscale athletics and fashion chain Sporting Life, which is opening its first store in that province next fall. "It might not be as good as it would have been two years ago. It will, I think, only get better as the economy stabilizes."

Still, the Alberta economy isn't expected to improve much in 2016, contributing to what could be an overall lacklustre year in retail and forcing merchants to work harder to make gains.

Merchandising sales are projected to rise 3.6 per cent in 2016, compared with an estimated 2.2 per cent in 2015 and 4.6 per cent in 2014, said retail consultant Ed Strapagiel.

"The biggest issue is still the economy – it's simply not recovering in any significant way," he said. The retail slowdown in the second half of 2015 will carry over into the first half of 2016, with some pickup by the end of the year, he predicted. But some of that growth will simply be a result of higher prices of imported goods to make up for heftier purchasing costs in U.S. dollars as supply contracts and currency hedging run out, he said.

Mr. Russell said he expects Sporting Life will have to raise prices by up to 10 per cent by next fall to cover the currency shift. Dollarama Inc. plans to raise its highest prices to $4 from $3 to help adjust to the weak loonie.

As prices rise, the luxury battle will heat up. Saks Fifth Avenue will open its first stores in Canada in 2016 while Seattle-based Nordstrom Inc., which arrived here about a year ago, will add more outlets. Reigning incumbent Holt Renfrew & Co. may feel the pinch, along with men's clothier Harry Rosen and even Sporting Life. At the same time, fashion chain La Maison Simons continues to expand beyond its Quebec base.

"There are always winners and losers," said Jerry Storch, chief executive officer of Hudson's Bay Co., which acquired New York-based Saks Inc. in late 2013.

In the mall, landlords will feel the strain of empty stores in the wake of U.S. Target Corp.'s 2015 departure and other faltering retailers' closings. The changes are rapidly redefining the retail landscape as digital powerhouse Amazon.com Inc. and other e-commerce players step up their efforts while brick-and-mortar stores increasingly scale back. Retailers will need to find ways to marry their physical and digital stores and better serve the ever more important mobile customer.

-Marina Strauss

The Canadian telecom industry got a jolt at the end of the year as Calgary cable operator Shaw Communications Inc. announced a deal to buy startup cellular carrier Wind Mobile Corp. and finally enter the wireless business.

The move sets up a whole new competitive dynamic for the wireless industry and, although it will not pose the same disruptive threat as a large foreign player entering the market, the mid-December news that Wind could soon be in the hands of a well-capitalized and long-established telecom operator sent shares of the country's three national carriers down sharply.

Vancouver-based Telus Corp. came under particular pressure as analysts warned that it could face the biggest threat from Shaw in the West, where Wind operates in British Columbia and Alberta.

Yet, it will be some time before the true threat to the Big Three becomes obvious, as the $1.6-billion deal still requires regulatory approvals and isn't expected to close until well into 2016. Shaw's exact pricing and marketing strategy for the business also remains to be seen and Wind is just beginning work to upgrade its 3G network to LTE – long-term evolution or 4G – service and that will not be complete until 2017.

"The real impact [of Shaw's deal to buy Wind] is still 12 to 18 months away," says Scotia Capital Inc.'s Jeff Fan, noting that Wind has to upgrade its "inferior network" before it can "compete more effectively long term."

Canada's foreign investment rules permitting non-Canadian ownership of small telecom companies will also be in the spotlight in 2016 as the federal government must decide whether to approve a $465-million deal for Colorado-based Zayo Group Holdings to buy Manitoba Telecom Services Inc.'s fibre-optic communications provider Allstream.

A U.S. company cleared to do business with the American government looks like a pretty safe bet for approval, but MTS was burned in the past when Ottawa rejected a deal to sell to Egyptian tycoon Naguib Sawiris's investment firm Accelero in 2013.

Broadband Internet will be a major point of public debate in 2016 as Canada's telecom regulator begins a proceeding in the spring that will consider whether high-speed access should be considered a "basic telecommunications service," a designation so far reserved for land-line telephones.

That hearing comes as telephone and cable companies are upgrading their networks and touting ever-faster speeds. Meanwhile, BCE Inc. has launched an appeal to the federal cabinet, challenging an earlier CRTC ruling that it must give small Internet providers access to its highest-speed services.

-Christine Dobby