Deloitte Canada has revised down its growth projection for Canada’s economy in 2027 by 20 percent due to challenging conditions for consumers and businesses. This adjustment follows a recent American ban on specific Canadian imports, further exacerbating the impact of the ongoing Canada-U.S. trade tensions.
The accounting firm anticipates a significant economic deceleration in the final quarter of this year and the beginning of 2027, attributed to the repercussions of the trade war escalation. Chief economist Dawn Desjardins points out that the imposition of hefty U.S. tariffs and Canada’s retaliatory measures will unevenly affect different sectors of the Canadian economy, with some facing severe impacts while others stand to benefit. Despite this, Desjardins highlights the positive outlook for targeted growth through the federal government’s fiscal support, investment initiatives, and defense spending.
Deloitte’s latest economic forecast predicts a 1.6 percent GDP growth for Canada in 2027, a decrease from their previous expectation of 2 percent growth. The firm also revised its 2026 GDP growth forecast to 0.9 percent, slightly up from the earlier estimate of 0.7 percent in June.
The economic uncertainty stemming from various factors such as potential cost increases, trade tensions with the U.S., and looming interest rate hikes has led to a cautious outlook for Canadian businesses. Desjardins notes that this environment is likely to result in a slower growth trajectory for the economy.
In a recent development, the Canada-U.S. trade conflict escalated 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, mentioning expectations of a fair deal being reached with Canada in the near future.
Statistics Canada reported that GDP growth in July remained stagnant compared to the previous month, following three consecutive months of economic expansion. The agency noted that while some sectors like construction and utilities saw increases, declines were observed in retail and wholesale trade industries. Looking ahead, the agency forecasts a 0.2 percent growth in GDP for August, with the mining and retail sectors offsetting declines in oil and gas extraction.
Economists like Andrew Grantham from CIBC anticipate the impact of the latest tariffs on the economy, emphasizing the importance of upcoming data releases such as the September jobs report and October inflation figures for the Bank of Canada’s future policy decisions. Despite the current uncertainties, the Bank of Canada is expected to maintain interest rates until the end of 2026, with potential rate hikes in 2027 as per projections by RBC economist Abbey Xu.