TORONTO – A “modest downturn”, but also an opportunity “for upside – and action”. This might be the “summary” of the report published today by “Deloitte Canada” and entitled “Trade Tensions Stall Momentum” (it’s the latest economic outlook – April 2025 edition).
According to the study (you can read it here), the Canadian economy is set to enter recession by the end of the year, with a slowdown that will affect the next six to eight months. “Deloitte” in fact predicts negative GDP growth for Canada in the second and third quarters and, by definition, a recession occurs for two consecutive quarters of negative GDP growth. However, a modest increase in Canadian GDP of 1.2% per year is also expected, thanks in part to a good start to the year and a potential recovery at the end of the year: GDP will grow in all provinces this year, with Newfoundland and Labrador and Alberta seeing the highest figure, + 1.7%.
On the jobs front, the report forecasts growth to slow to 1% and the unemployment rate to likely rise above 7% as job losses mount. Consumer confidence has also plummeted, with Canadians increasingly concerned about their financial health. As for home sales, they have hit their lowest level since 2009, likely because buying a home becomes much less attractive when people are worried about their jobs. With rising economic uncertainty and weak demand, companies are backing down, reducing investment plans and bracing for a slowdown.
But the report isn’t all doom and gloom: inflation, for example, is set to remain close to the Bank of Canada’s 2% target rate. Forecasts also suggest there could be some long-term upside for Canadian companies, and the outlook points to long-term growth potential for them. With U.S. and Chinese companies facing rising costs from tariffs, Canadian industries may even find opportunities to step in and increase their exports.
In short, quoting the words written in the “Deloitte” report, this could be “Canada’s rare opportunity for upside and action. The tariff crisis may be the catalyst for much needed change…”. In other words: every cloud has a silver lining.
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