Canada Dodges Recession, But Trade Uncertainty Continues too Weigh on Growth
TORONTO – Canada is expected to avoid a recession, though its economic recovery will remain sluggish and “bruised” by ongoing trade uncertainties, according to a recent survey of economists. While a contraction has been averted, growth forecasts remain muted, with Canada likely to experience sub-2% expansion until mid-2026.
The cautious outlook stems from concerns about the impact of global trade conditions on business investment. Economists predict a 0.5% decline in business investment for the third quarter, an improvement from earlier forecasts of a 4.3% drop, but still a drag on overall economic performance. This hesitation impacts businesses and consumers alike, potentially delaying expansion plans and impacting job creation.
Statistics Canada data released Friday indicated a 0.7% economic expansion for the third quarter, aligning with the Bank of Canada’s projection of roughly 1% growth.Despite these positive indicators, management anticipates a challenging period ahead. “I doubt 2026 will see an above-trend pace, and Canada is likely to remain sub-2% until at least the middle of next year,” a source stated.
Unemployment is projected to peak at 7.3% in the final quarter of 2025. Though, inflation is expected to remain stable, hovering around the Bank of Canada’s 2% target. The survey, conducted between September 19 and September 24, included input from up to 30 economists.
