Deloitte Canada has revised its growth projection for Canada’s economy in 2027, lowering it by 20 percent due to challenging conditions faced by consumers and businesses. The accounting firm attributes this adjustment to the recent implementation of a new American ban on specific Canadian imports.
The ongoing trade tensions between Canada and the U.S. are expected to result in a significant economic slowdown towards the end of this year and the beginning of 2027. Chief economist Dawn Desjardins highlights that the impact of the escalating trade war will vary across different sectors of the Canadian economy, with some facing challenges while others may see growth opportunities. She also points out that the government’s fiscal support, investment efforts, and defense expenditures are positive indicators for targeted growth.
Deloitte’s latest economic forecast anticipates a 1.6 percent GDP growth for Canada in 2027, down from the previously projected 2 percent growth. The firm has also adjusted its estimate for 2026, now expecting a 0.9 percent growth compared to the earlier forecast of 0.7 percent.
Desjardins expresses concerns about the uncertainties faced by Canadian companies, such as increased costs, trade friction with the U.S., and potential interest rate hikes, creating an environment of unpredictability that could lead to slower economic growth.
Meanwhile, the trade war between Canada and the U.S. has escalated from tariffs to bans on certain products. President Donald Trump’s administration has halted imports of Canadian alcohol, motorcycles, molasses, and whey products. Trump remains confident in the U.S.’s stance, predicting a fair deal to be reached with Canada in the near future.
Amidst this economic turmoil, Statistics Canada reported stagnant GDP growth for July, following a period of consecutive expansion. The agency notes that while some sectors like construction and utilities saw gains, retail and wholesale trade experienced declines. Looking ahead, economists are closely monitoring the impact of the latest tariffs on the economy.
The Bank of Canada is focusing on upcoming economic data, including the September jobs report and inflation figures for last month, as it prepares for its next interest rate decision in late October. Despite the challenges posed by tariffs, the bank aims for a broad economic recovery and is considering the timing of potential rate hikes in the future.