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Deloitte Canada Projects Modest Growth Amid Economic Headwinds
Deloitte Canada has released its summer economic outlook, forecasting that the Canadian economy will experience minimal signs of a recession. The consulting firm stated in its report that there is "little evidence" to suggest an economic downturn is imminent.
According to the forecast, the Canadian economy is expected to rebound toward the end of 2026. Deloitte projects that economic growth will reach 0.7 percent for the year 2026. This projection follows a period of weak activity recorded in the first quarter of the year.
Dawn Desjardins, chief economist at Deloitte Canada, addressed the current state of the economy in the report released on Thursday. She noted that several factors are currently weighing on economic activity. These elements include ongoing trade tensions, elevated energy costs, persistent supply chain pressures, and lower confidence levels among consumers and businesses.
Despite these suppressing forces, the outlook anticipates a recovery trajectory. Deloitte expects growth to recover further in the following year. The firm projects that the economy will reach 2 percent growth in 2027.
Desjardins explained the mechanism behind this anticipated recovery in an interview regarding the report. She stated that as clarity emerges on the key issues impacting the economy, business investment is expected to accelerate. This increase in investment, she said, will create jobs.
The forecast also addresses the state of consumer sentiment. Desjardins noted that Canadian consumer confidence remains soft at present. She attributed this softness to worries regarding financial futures and job security. According to the report, these concerns are interconnected with the broader economic pressures.
Deloitte’s outlook suggests that as the economy recovers, consumer sentiment is expected to improve alongside it. The firm indicates that the acceleration of business investment and subsequent job creation will help alleviate some of the anxieties currently affecting households.
Factors Influencing Economic Performance
The summer outlook identifies specific variables contributing to the current economic climate. Trade tensions remain a primary factor cited by Deloitte as weighing on activity. These tensions contribute to uncertainty in markets and supply chains.
Energy costs are another significant element suppressing growth. The report links these costs directly to the challenges faced by businesses and consumers. Supply chain pressures continue to complicate production and distribution, further impacting economic indicators.
Confidence levels have declined across multiple sectors. Lower business confidence affects investment decisions, while lower consumer confidence impacts spending habits. Deloitte’s analysis suggests that these psychological factors are as impactful as tangible economic pressures in the short term.
Desjardins emphasized the importance of clarity in resolving these issues. She stated that resolving uncertainties related to trade and supply chains is critical for restoring business confidence. The acceleration of investment, she argued, is a necessary step toward job creation.
The forecast for 2027 indicates a more robust recovery compared to 2026. The jump from 0.7 percent growth in 2026 to 2 percent in 2027 reflects Deloitte’s assessment of the lagging effects of current pressures and the subsequent rebound.
Consumer confidence is viewed as a leading indicator in this recovery model. As job security improves due to new investments, financial worries are expected to diminish. This improvement in sentiment is projected to support further economic activity.
Deloitte Canada’s projections provide a timeline for economic stabilization. The firm’s analysis relies on the assumption that clarity will emerge from current disputes and logistical challenges. The resulting environment is expected to foster both business expansion and consumer optimism.
