Deloitte Canada has revised its growth projection for Canada’s economy in 2027, reducing it by 20 percent due to challenging conditions affecting consumers and businesses. The accounting firm’s latest forecast coincides with a recent American ban on specific Canadian imports, leading to heightened tensions in the Canada-U.S. trade war and an anticipated economic slowdown in the coming months.
Chief economist Dawn Desjardins highlighted the uneven impact of U.S. tariffs and Canada’s retaliatory measures across various sectors of the Canadian economy. While some industries face significant challenges, others are expected to experience growth and job creation. Deloitte’s economic outlook now predicts a 1.6 percent GDP growth rate for Canada in 2027, down from the previously projected two percent.
Desjardins emphasized the uncertainty faced by Canadian companies, including higher costs, trade friction with the U.S., and potential interest rate hikes, creating a volatile business environment. This uncertainty is likely to result in a slower growth trajectory for the economy moving forward.
The ongoing trade tensions escalated on Tuesday as the U.S. administration imposed bans on Canadian alcohol, motorcycles, molasses, and whey products. President Trump expressed confidence in the U.S.’s stance and predicted a favorable outcome for the country in future negotiations with Canada. The trade dispute has also impacted the steel industry, with contrasting developments such as new plant construction in the U.S. and layoffs in Canadian steel mills.
Meanwhile, economic uncertainty continues to affect both consumers and businesses in Canada, leading to cautious spending habits and slower economic growth projections. In July, Canada’s GDP growth remained stagnant after a period of consecutive expansion, with fluctuations observed across various industries.
Looking ahead, economists are closely monitoring the effects of the trade war on the Canadian economy, with a focus on upcoming economic indicators such as the September jobs report and inflation data. The Bank of Canada is expected to maintain interest rates in the near term, but potential risks may prompt earlier rate hikes in 2027 according to some analysts.