Deloitte Slashes Canada's Economic Growth Projections by 20%

Deloitte has revised its economic growth projection for Canada downwards by 20% as worsening trade tensions between Canada and the US are expected to impact the economy in 2027. The firm's fall economic outlook report, titled 'Weathering change: Canadian businesses navigate renewed uncertainty,' forecasts a GDP increase of 1.6% next year, down from its previous estimate.

According to Dawn Desjardins, chief economist at Deloitte Canada, Canada's trade outlook has deteriorated following the renewed escalation in trade tensions with the US. The report highlights that recent tariff measures, including a 50% duty on hundreds of Canadian goods, as well as Canada's reciprocal counter-tariff measures, will likely have a delayed effect on the economy.

The report notes that business investment in 2026 is expected to increase by 1.6%, driven by AI data centre projects and investment decisions through the federal government's Major Projects Office. However, Deloitte warns that the economy remains vulnerable to renewed trade tensions and expects four potential interest rate hikes next year.