Deloitte Canada has reduced its growth projection for Canada’s economy in 2027 by 20 percent due to challenging conditions faced by consumers and businesses. The accounting firm’s updated forecast coincides with a recent American ban on specific Canadian imports.
The escalation in the Canada-U.S. trade conflict is expected to lead to a significant economic slowdown in the last quarter of this year and early 2027, according to Deloitte. Chief economist Dawn Desjardins highlighted the uneven impact of U.S. tariffs and Canada’s retaliatory measures, affecting various sectors differently. However, she noted that the government’s support programs, investments, and defense spending could drive targeted growth.
Deloitte’s latest economic outlook projects a 1.6 percent GDP growth for Canada in 2027, down from the previous estimate of 2 percent. The firm also revised its 2026 growth forecast to 0.9 percent, showing a slight improvement from an earlier prediction of 0.7 percent.
Desjardins emphasized the prevailing economic uncertainty’s impact on both consumers and businesses. She suggested that Canadians might become more cautious with their spending and increase savings, leading to a slower pace of economic expansion.
Meanwhile, Statistics Canada reported stagnant GDP growth in July, following three consecutive months of expansion. The agency noted that while some sectors like construction and utilities saw gains, retail and wholesale trade experienced declines. Looking ahead, the agency expects a 0.2 percent growth in GDP for August, with mining and retail sectors offsetting decreases in oil and gas extraction.
Senior economist Andrew Grantham anticipates the effects of the recent tariffs on the economy, following the cooling down from a strong second-quarter performance. He highlighted the importance of upcoming data releases, including the September jobs report and October inflation figures, for the Bank of Canada’s policy decisions.
Despite the uncertainties, the Bank of Canada has continued to hold interest rates steady, with potential risks pointing towards earlier rate hikes. RBC economist Abbey Xu indicated a base case scenario of interest rates remaining unchanged until the end of 2026, with a possibility of gradual increases in 2027.