Deloitte Canada has reduced its growth projection for Canada’s economy in 2027 by 20 percent, attributing this adjustment to challenging conditions facing consumers and businesses. The accounting firm’s most recent forecast coincides with a recent American ban on specific Canadian imports that went into effect on Tuesday.
Anticipating the repercussions of the escalating Canada-U.S. trade tensions, Deloitte foresees a significant economic slowdown in the final quarter of this year and the beginning of 2027. Chief economist Dawn Desjardins highlighted the uneven impact of billions of dollars in U.S. tariffs and Canada’s corresponding measures on different sectors of the Canadian economy. Desjardins also noted that while some sectors may face challenges, others are expected to experience growth and job creation.
Deloitte’s updated economic outlook predicts a 1.6 percent GDP growth for Canada in 2027, down from the previously projected two percent growth. The firm also revised its 2026 forecast to a 0.9 percent economic expansion, slightly up from the earlier estimate of 0.7 percent.
The ongoing uncertainty in the economic landscape is causing concern among consumers and businesses, leading to a more cautious approach to spending and increased savings. Desjardins emphasized that this cautious behavior is likely to result in a slower pace of economic growth.
In related news, Statistics Canada reported that Canada’s GDP growth in July remained flat compared to the previous month after three consecutive months of economic expansion. The agency highlighted that while some industries like construction and utilities saw increases, declines in retail and wholesale trade sectors offset these gains. Looking ahead, the agency’s flash estimate for August projects 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 expect the impact of the latest tariffs to become more pronounced in the coming months, following the cooling down of the economy from a robust second-quarter performance. With the Bank of Canada closely monitoring economic indicators, including the upcoming September jobs report and inflation data for last month, analysts are assessing the potential timing of interest rate adjustments, with some suggesting earlier hikes may be warranted based on recent developments.
Overall, the economic landscape in Canada is facing challenges amid trade tensions with the U.S., prompting economists and policymakers to closely monitor developments and adjust strategies to support a sustainable economic recovery.