Deloitte Canada has reduced its growth projection for Canada’s economy in 2027 by 20%, attributing this adjustment to challenging conditions affecting both consumers and businesses. This revision coincides with a recent 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 latter part of this year and the early months of 2027, according to Deloitte’s chief economist, Dawn Desjardins. The impact of substantial U.S. tariffs and corresponding measures by Canada will vary across different sectors of the Canadian economy, resulting in both setbacks and advancements. Desjardins highlighted the positive influence of the federal government’s financial support, investment programs, and defense expenditure on targeted growth areas.
Deloitte’s latest economic forecast predicts a 1.6% GDP growth for Canada in 2027, down from the initial projection of 2% made in late June. The firm also anticipates a slight improvement in economic growth for 2026, with an estimated 0.9% expansion compared to the previous forecast of 0.7%.
The prevailing economic uncertainties are affecting consumer behavior and business decisions, leading to a more cautious approach towards spending. Desjardins emphasized that Canadians may increase their savings and reduce discretionary spending, pointing to a slower growth trajectory as a consequence.
In a separate report, Statistics Canada revealed that GDP growth remained stagnant in July compared to the previous month after three consecutive months of economic expansion. The agency noted that while the goods-producing industries showed minimal change, the services-producing sector experienced a flat performance due to mixed results across various segments.
Looking ahead, economists like Andrew Grantham from CIBC anticipate the impact of recent trade tariffs on the economy, with a focus on forthcoming data releases such as the September jobs report and August inflation figures. The Bank of Canada’s decision on interest rates, scheduled for October 28, will also be closely watched amidst the evolving economic landscape shaped by trade tensions between Canada and the U.S.