Deloitte Canada has revised its growth projection for the Canadian economy in 2027, lowering it by 20 percent due to challenging conditions facing consumers and businesses. The adjustment in forecast by the accounting firm 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 last quarter of this year and the beginning of 2027, according to Deloitte’s chief economist, Dawn Desjardins. She highlighted that the impact of the trade war, including billions of dollars in tariffs and countermeasures, will not affect all sectors equally, with some industries facing hardships while others see growth opportunities. Desjardins also mentioned that government support, investment initiatives, and defense spending are positive signals for targeted growth.
Deloitte’s latest economic outlook predicts a 1.6 percent GDP growth for Canada in 2027, down from the earlier forecast of 2 percent. The firm also anticipates a 0.9 percent growth in 2026, a slight improvement from the previous estimate of 0.7 percent. Desjardins emphasized the uncertainty facing Canadian companies, with factors such as increased costs, trade friction with the U.S., and potential interest rate hikes contributing to a challenging business environment.
The Canada-U.S. trade war escalated recently with the U.S. imposing bans on certain Canadian products, including alcohol, motorcycles, molasses, and whey. President Donald Trump expressed confidence in the U.S. stance, claiming that Canada has treated the U.S. unfairly. Amid these developments, there were announcements of both new investments and job cuts in the steel industry, reflecting the ongoing economic dynamics between the two countries.
The prolonged economic uncertainty is affecting both consumers and businesses in Canada, leading to cautious spending behavior and slower growth prospects. Statistics Canada reported that GDP growth in July was stagnant after three months of expansion, with various sectors experiencing mixed performance. Economists are now closely monitoring the impact of the latest tariffs and await upcoming economic data releases, such as the September jobs report and October inflation figures, to assess the overall economic outlook.
The Bank of Canada, while acknowledging the challenges posed by tariffs, opted to keep interest rates steady in its recent meetings. Analysts anticipate a potential shift in rate policy in 2027, depending on economic developments. The central bank aims for a broad-based economic recovery but remains vigilant about risks to the current economic trajectory.