Deloitte Canada has reduced its growth projection for Canada’s economy in 2027 by 20 percent, attributing this adjustment to challenging conditions facing consumers and businesses. The firm’s most recent analysis coincides with the implementation of a new American ban on specific Canadian imports.
The ongoing trade tensions between Canada and the U.S. are expected to lead to a significant economic slowdown in the last quarter of this year and the beginning of 2027, according to Deloitte. Chief economist Dawn Desjardins highlighted that the impact of substantial U.S. tariffs and Canada’s retaliatory measures will vary across different sectors of the Canadian economy, potentially causing hardships for some industries while benefiting others. Desjardins also pointed out that the federal government’s support programs, investment efforts, and defense spending could foster targeted growth.
Deloitte’s updated economic forecast for Canada anticipates a 1.6 percent GDP growth in 2027, a revision from the previously projected 2 percent growth for next year. The firm’s current outlook for 2026 predicts a 0.9 percent expansion, slightly better than the earlier estimate of 0.7 percent.
Desjardins emphasized the prevailing economic uncertainty’s impact on both consumers and businesses, leading to heightened caution in spending and potentially slower growth. Meanwhile, Statistics Canada reported stagnant GDP growth in July, following three consecutive months of economic expansion, with the agency forecasting a 0.2 percent growth for August.
The recent economic developments have prompted experts like Andrew Grantham from CIBC to closely monitor the effects of the escalating trade tensions on the Canadian economy. The upcoming September jobs report and October inflation data will be crucial factors influencing the Bank of Canada’s interest rate decisions. Despite the persistent challenges posed by Canada-U.S. tariffs, the Bank of Canada aims for a gradual economic recovery, with potential interest rate adjustments expected in 2027.
The economic landscape remains uncertain as the impact of trade disputes continues to unfold, affecting various sectors and influencing policy decisions in both countries.