Deloitte Canada has reduced its growth projection for Canada’s economy in 2027 by 20 percent due to challenging conditions for consumers and businesses. This adjustment in forecast follows a recent American ban on specific Canadian imports, which Deloitte expects will lead to a significant economic slowdown in the last quarter of this year and early 2027.
According to Chief economist Dawn Desjardins, the impact of escalating tensions in the Canada-U.S. trade conflict will not be uniform across the Canadian economy, with certain sectors being hit hard while others may see growth and job creation. She highlighted that the federal government’s fiscal support, investment initiatives, and defense spending could drive targeted growth despite the uncertainties.
Deloitte’s revised economic outlook predicts a 1.6 percent GDP growth for Canada in 2027, down from the previous forecast of 2 percent. The firm also revised its estimate for 2026, now expecting a 0.9 percent growth compared to the earlier projection of 0.7 percent.
Desjardins emphasized the current uncertain environment facing Canadian companies, including the prospect of increased costs, trade friction with the U.S., and potentially higher interest rates, leading to a slower growth trajectory for the economy.
The trade war between Canada and the U.S. escalated as the U.S. administration banned imports of Canadian alcohol, motorcycles, molasses, and whey products. President Trump expressed confidence in the U.S. stance and predicted a fair deal with Canada in the near future.
The prolonged economic uncertainty is affecting both consumers and businesses, leading to cautious spending behavior and slower growth. Statistics Canada reported flat GDP growth for July, following three consecutive months of expansion. The agency anticipates a 0.2 percent growth in GDP for August, with some sectors offsetting declines in others.
Economists like Andrew Grantham are closely monitoring the impact of tariffs on the economy and are awaiting upcoming economic data releases, such as the September jobs report and October inflation figures. While the Bank of Canada has held interest rates steady in recent meetings, there are indications of potential rate hikes in 2027 based on evolving economic conditions.