Growth slows down, investment stalls
According to Deloitte analysis, Canada's GDP growth is expected to hover above 1% in 2025, well below the historical average. A mix of high interest rates, inflationary pressures and global supply chain uncertainty has slowed consumer demand and reduced investor confidence.
“Private sector investment, especially in manufacturing and infrastructure, has declined significantly,” the report noted. “As borrowing costs and policy ambiguity increase, many businesses choose to delay or lower their major capital projects.”
The report also shows that the reduction in FDI is driven by geopolitical tensions and uncertainty surrounding North American trade policy.
Tariff risk threatens trade stability
The core focus of Deloitte is the growing threat to new U.S. tariffs, especially after political developments south of the border. Although certain Canadian sectors, such as automatic parts that comply with Cusma (Canada-US-Mexico consistency) have been exempted from tariffs, the wider threat of trade protectionism remains. “Sustaining and expanding these tariff exemptions is crucial to retaining Canada’s trade competitiveness,” Deloitte’s trade competitiveness is crucial. “Any upgrade could deeply impact Canada’s export-driven industries, including automobiles, agriculture and technology.” Also read: How Canada’s 2025 elections affect its economic future
Strategic policies required to avoid crises
The report urges Canadian policymakers to act quickly and decisively to prevent deeper economic contractions. Suggestions include:
- Strengthen the exploration of new bilateral agreements and other trade agreements with the Asian and European markets.
- Targeted fiscal stimulus to support key sectors and promote investment in public infrastructure.
- Workforce development policies to address labor shortages in technology, healthcare and skilled industries.
The consulting firm also highlights the need to ensure long-term resilience with an innovation-driven economic model.
Warnings in the political transition
The Deloitte report arrived just weeks after Canada's 2025 federal election, with former Canadian bank governor Mark Carney becoming prime minister. His campaign highlights economic stability, industrial growth and reduced dependence in the United States – the Deloitte Report has both challenges and opportunities.
Carney’s leadership team has not responded to the findings, but experts believe the report could impact upcoming fiscal policy decisions, including budget allocation and trade strategy adjustments.
Conclusion: The decisive year ahead
While Canada has not yet recession, Deloitte’s warning highlights the vulnerability of the current economic landscape. Whether the country can maintain its foothold on this rope will depend on quick, data-driven decisions at the federal and provincial levels.
