Deloitte Canada has reduced its growth projection for Canada’s economy in 2027 by 20 percent due to challenging conditions for consumers and businesses. The accounting firm’s updated forecast coincides with a recent American ban on specific Canadian imports, leading to a significant economic slowdown expected in the final quarter of this year and early 2027.
Chief economist Dawn Desjardins highlighted the impact of escalating tensions in the Canada-U.S. trade war, with billions of dollars in U.S. tariffs and Canada’s retaliatory measures affecting various sectors differently. While some industries are likely to face challenges, others are poised for growth and job opportunities. Desjardins emphasized that the federal government’s support programs, investment strategies, and defense spending are positive indicators for targeted economic expansion.
Deloitte’s latest economic outlook projects a 1.6 percent GDP growth for Canada in 2027, down from the previous estimate of two percent. The firm also revised its 2026 forecast to a 0.9 percent growth rate, showing a slight improvement from its earlier projection of 0.7 percent.
Desjardins expressed concerns about the uncertain business environment, with factors such as potential cost increases, trade tensions with the U.S., and rising interest rates creating instability. This uncertainty is expected to result in a slower growth trajectory for the Canadian economy.
The Canada-U.S. trade conflict escalated with the U.S. imposing bans on certain Canadian products, including alcohol, motorcycles, molasses, and whey items. President Donald Trump emphasized his administration’s stance, claiming that the U.S. would emerge victorious in the trade dispute and predicting a fair deal with Canada in the near future.
The ongoing economic uncertainty is affecting both consumers and businesses, leading to cautious spending behavior and increased savings among Canadians. Desjardins highlighted a potential slowdown in economic growth as a consequence of this cautious approach.
In other news, Statistics Canada reported flat GDP growth for July, following three months of economic expansion. The agency noted that the goods-producing and services-producing industries showed minimal growth, with fluctuations in various sectors. Looking ahead, economists are monitoring the impact of recent tariffs on the economy, with a focus on upcoming job reports and inflation data.
The Bank of Canada remains vigilant amid trade tensions, with policymakers emphasizing the need for a broader economic recovery. Despite holding interest rates steady in recent meetings, there are discussions around potential rate hikes in 2027. RBC economist Abbey Xu noted risks of earlier interest rate adjustments based on recent Bank of Canada communications.
Overall, the economic landscape remains uncertain, with various factors influencing Canada’s growth trajectory and policymakers closely monitoring developments in the global trade environment.