Deloitte Canada has revised its growth projection for Canada’s economy in 2027, lowering it by 20 percent due to challenging conditions faced by consumers and businesses. This adjustment follows the implementation of a new American ban on specific Canadian imports, marking a significant development in the ongoing Canada-U.S. trade dispute.
According to Deloitte’s chief economist, Dawn Desjardins, the trade tensions between the two countries are expected to lead to a substantial economic slowdown towards the end of this year and into early 2027. Desjardins highlighted the uneven impact of the billions of dollars in U.S. tariffs and Canada’s retaliatory measures on different sectors of the Canadian economy. Despite these challenges, she pointed out that the government’s fiscal support, investment initiatives, and defense spending could drive targeted growth in certain sectors.
Deloitte’s latest economic forecast anticipates a 1.6 percent GDP growth for Canada in 2027, down from the previously projected two percent growth. The firm also revised its 2026 GDP growth estimate to 0.9 percent, showing a slight improvement from its earlier forecast of 0.7 percent.
Desjardins emphasized the current atmosphere of economic uncertainty, which is influencing both consumers and businesses. She noted that Canadians are becoming more cautious about their spending habits, leading to a slower pace of economic growth in the foreseeable future.
In other news, Statistics Canada reported that Canada’s GDP growth remained flat in July after three consecutive months of expansion. The agency attributed this stagnation to mixed performances in various industries, with the services-producing sector showing minimal growth while the goods-producing sector remained unchanged.
Looking ahead, economists are closely monitoring the impact of the latest tariffs on the economy, with a particular focus on upcoming economic indicators such as the September jobs report and October’s inflation data. The Bank of Canada is expected to maintain its current interest rates through the end of 2026 before considering gradual rate hikes in 2027, amid uncertainties stemming from the trade tensions with the U.S.