Deloitte Canada has revised its growth projection for the Canadian economy in 2027, reducing it by 20 percent due to challenging conditions faced by consumers and businesses. This adjustment in the forecast coincides with a recent ban on specific Canadian imports imposed by the United States, leading to heightened tensions in the Canada-U.S. trade relationship.
The impact of escalating trade tensions between the two countries is expected to result in a significant economic slowdown towards the end of this year and the beginning of 2027. Deloitte’s Chief Economist, Dawn Desjardins, highlights that the imposition of billions of dollars in U.S. tariffs and Canada’s corresponding measures will affect different sectors of the Canadian economy unevenly, causing hardships for some industries while benefiting others. Furthermore, Desjardins acknowledges the positive influence of the federal government’s fiscal support, investment strategies, and defense spending on targeted growth areas.
Desjardins emphasized the varying effects on different sectors, stating, “While some sectors face uncertainties and challenges, others are poised for growth and job creation.” Deloitte’s latest economic outlook predicts a 1.6 percent GDP growth for Canada in 2027, a decrease from the previously anticipated 2 percent growth. The firm also revised its 2026 forecast to a 0.9 percent growth, showing a slight improvement from the earlier estimate of 0.7 percent.
The ongoing economic uncertainty is impacting both consumers and businesses, leading to cautious spending behavior and increased savings among Canadians. Desjardins anticipates a slower pace of growth as a result of these factors.
In another development, Statistics Canada reported that the GDP growth for July remained flat compared to the previous month after three consecutive months of expansion. The agency noted that while some sectors such as construction and utilities saw increases, declines in retail and wholesale trade offset these gains. Looking ahead, the agency’s flash estimate for August anticipates a 0.2 percent growth, with the mining and retail sectors expected to counterbalance declines in oil and gas extraction.
Economists like Andrew Grantham from CIBC foresee challenges ahead as the impact of recent tariffs unfolds. The focus now shifts to upcoming economic indicators such as the September jobs report and October’s inflation data, influencing the Bank of Canada’s decisions on interest rates. Despite the uncertainties, the Bank of Canada aims for a broad economic recovery and has signaled potential rate adjustments in the future.
Overall, the economic landscape in Canada is marked by uncertainties stemming from trade tensions and policy decisions, influencing growth projections and monetary policy considerations.
