Deloitte Canada has reduced its growth forecast for Canada’s economy in 2027 by 20%. The accounting firm attributes this adjustment to challenging conditions faced by consumers and businesses. The current economic outlook is influenced by a recent American ban on specific Canadian imports, which Deloitte predicts will lead to a significant economic slowdown in the last quarter of this year and the beginning of 2027.
Chief economist Dawn Desjardins highlights the impact of escalating tensions in the Canada-U.S. trade war, with billions of dollars in U.S. tariffs and corresponding Canadian measures affecting various sectors differently. While some sectors will face challenges, others are expected to experience growth and job creation. The federal government’s fiscal support, investment initiatives, and defense spending offer positive signals for targeted growth.
Deloitte’s latest economic projection for Canada anticipates a 1.6% GDP growth in 2027, lower than the previously forecasted 2%. The firm also revised its 2026 economic growth estimate to 0.9%, a slight improvement from the earlier prediction of 0.7%.
Desjardins notes the uncertainties facing Canadian companies, including potential cost increases, trade partner friction, and higher interest rates, creating an uncertain business environment leading to a slower growth trajectory.
The trade war between Canada and the U.S. has escalated to include bans on specific Canadian products, such as alcohol, motorcycles, molasses, and whey products, by the U.S. government. President Donald Trump expressed confidence in the U.S.’s position, indicating that negotiations may lead to a fair deal. Trump highlighted a new $15 billion U.S. steel plant project in Iowa as evidence of the effectiveness of tariffs against Canada, coinciding with layoffs at a steel mill in Hamilton, Ontario.
Amid the ongoing economic uncertainty, Desjardins emphasizes the impact on consumer confidence and spending habits. Canadians are expected to increase savings and be more cautious with spending, indicating a slower pace of economic growth.
Statistics Canada reported flat GDP growth for July, following three months of expansion. The agency highlighted minimal changes in goods-producing and services-producing industries, with expectations of 0.2% GDP growth in August. Economists like Andrew Grantham anticipate the effects of recent tariffs on the economy and are monitoring upcoming economic indicators, such as the September jobs report and October inflation data.
Bank of Canada Governor Tiff Macklem characterized Canada-U.S. tariffs as high but limited in scope within the economy. The bank aims for a broad economic recovery, maintaining interest rates in the near term but signaling potential rate hikes earlier than expected.
Overall, economic uncertainties due to trade tensions and policy decisions continue to shape Canada’s economic outlook, with experts closely monitoring developments and indicators for future trends.