Deloitte Canada has adjusted its growth forecast for Canada’s economy in 2027, reducing it by 20%. The accounting firm attributes this revision to challenging conditions faced by consumers and businesses. This update coincides with a new ban imposed by the United States on certain Canadian imports.
The recent escalation in the Canada-U.S. trade war is expected to result in a significant economic slowdown in the final quarter of this year and the beginning of 2027. Deloitte’s Chief economist, Dawn Desjardins, highlights the unequal impact that billions of dollars in U.S. tariffs and Canada’s retaliatory measures will have on various sectors of the Canadian economy. However, Desjardins also notes that the federal government’s fiscal support, investment initiatives, and defense spending are positive indicators for targeted growth.
Deloitte’s latest economic projection anticipates a 1.6% GDP growth for Canada in 2027, down from their previous estimate of 2%. In comparison, the firm expects a 0.9% growth in 2026, a slight improvement from the earlier forecast of 0.7%.
Desjardins expressed concerns about the uncertain environment facing Canadian companies, which includes the prospect of increased costs, trade tensions with the U.S., and potential interest rate hikes. This uncertainty is likely to result in a slower growth trajectory for the economy.
Simultaneously, the Canada-U.S. trade conflict has evolved from tariffs to bans on specific products, with President Donald Trump halting imports of Canadian alcohol, motorcycles, molasses, and whey products. Trump’s administration views these actions as necessary to address what they perceive as unfair treatment of the U.S. by Canada.
Furthermore, recent data from Statistics Canada indicates that the country’s GDP growth in July remained stagnant compared to the previous month after three consecutive months of expansion. The agency noted that while some sectors like construction and utilities saw increases, retail and wholesale trade experienced declines.
Economists like Andrew Grantham are closely monitoring the impact of the latest tariffs on the economy, emphasizing the importance of upcoming economic data releases, such as the September jobs report and inflation figures for the previous month. The Bank of Canada is expected to maintain its current interest rates for the remainder of 2026 before potentially considering gradual increases in 2027.
