Deloitte Canada has revised its growth projection for Canada’s economy in 2027, reducing it by 20 percent due to challenging conditions for consumers and businesses. This adjustment follows the implementation of a new ban on specific Canadian imports by the United States, contributing to escalating tensions in the Canada-U.S. trade war.
The trade conflict is expected to lead to a significant economic slowdown towards the end of this year and into early 2027, as billions of dollars in U.S. tariffs and corresponding Canadian measures unevenly impact various sectors of the Canadian economy. Despite these challenges, Deloitte’s Chief Economist Dawn Desjardins highlights the positive influence of federal government support, investment initiatives, and defense spending on targeted growth areas.
Desjardins emphasized the contrasting impacts on different sectors, stating, “For some, it’s a little bit like the Earth is moving under their feet — and not in a positive way. While in other sectors, I think we can anticipate growth and job creation.” Deloitte’s updated economic forecast predicts a 1.6 percent GDP growth for Canada in 2027, down from the previously anticipated two percent. The firm also anticipates a modest uptick in economic growth to 0.9 percent in 2026, slightly higher than the previous estimate of 0.7 percent.
The ongoing economic uncertainty is affecting both consumers and businesses, prompting a cautious approach to spending and leading to a slower pace of growth. Desjardins noted that Canadians are likely to increase their savings and adopt a more conservative spending behavior in response to the uncertain environment.
In parallel, recent data from Statistics Canada revealed that GDP growth in July remained stagnant compared to the previous month after three consecutive months of expansion. The report highlighted that while some sectors like construction and utilities saw growth, retail and wholesale trade experienced declines. Looking ahead, the agency’s flash estimate for August anticipates a 0.2 percent growth, with the mining and retail sectors offsetting declines in oil and gas extraction.
Experts, including Andrew Grantham from CIBC, expect the impact of recent tariffs to become more pronounced in the coming months. Grantham emphasized the importance of forthcoming economic indicators such as the September jobs report and October’s inflation data for the Bank of Canada’s policy decisions. The central bank, led by Governor Tiff Macklem, is closely monitoring the evolving economic landscape and considering the possibility of adjusting interest rates in response to changing conditions.
Overall, the economic outlook for Canada remains uncertain, with various factors influencing the country’s growth trajectory. The implications of the Canada-U.S. trade war and the evolving global economic landscape continue to shape the near-term economic prospects for Canada.
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