Canada's former ambassador to the United States is predicting Barack Obama will win tomorrow's election, with both the Republicans and Democrats losing ground.

Frank McKenna told CBC's Nancy Wilson on Monday he expects a political "gridlock," and the challenge will be how both parties work together to tackle the country's fiscal woes.

"[If] they can figure that out, we are going to see the virtuous circle of growth and prosperity that we saw in Canada in the 1990s," said McKenna. "If they don't figure it out, we're going to be potentially back into a recession."

McKenna, a former New Brunswick premier who served as Canada's ambassador to the U.S. from 2005-06, is now in the financial services industry.

No matter the outcome of Tuesday's vote, with the U.S. president facing Republican rival Mitt Romney, McKenna said either candidate would be "very friendly" towards Canada and likely approve the building of the Keystone XL pipeline.

Obama rejected the bid by energy company TransCanada last January to build the $7 billion pipeline from Alberta to the Gulf of Mexico.