Deloitte Slashes Canada's Economic Forecast Amid Trade Tensions

Deloitte has downgraded its economic forecast for Canada, citing ongoing trade tensions and elevated energy prices as major concerns. The firm's latest report predicts a slowing pace of economic activity in the coming years.

The Deloitte team, led by chief economist Dawn Desjardins, revised their 2026 GDP forecast up 0.2 percentage points to 0.9% based on Canada's ability to navigate turbulent trade relationships and energy price fluctuations.

However, the strong 3.3% GDP gain in the second quarter could be a highlight of a slowing economy. Desjardins notes that Canadian companies and consumers will need time to adjust to the new operating environment caused by trade tensions.

The report highlights business non-residential investment as a weak spot in Canada's economy, lagging behind government spending on infrastructure. Deloitte expects investment to creep up by 1.6% in 2026 and 3.5% in 2027 due to policy changes aimed at improving competitiveness.

Renewed trade tensions with the U.S. have deteriorated Canada's trade outlook, putting pressure on goods exports. Deloitte forecasts exports will increase just 0.3% in 2027, reflecting a combination of Canadian businesses needing time to reposition supply chains and establish new export markets and tariffs weakening overall demand.