Finance firm says Canada will avoid recession and growth expected, though risks remain

A report out by a leading finance and accounting firm says that Canada will avoid a technical recession this year and while financial risks remain, 2026 looks to be more prosperous.

Deloitte’s fall economic outlook outlines 2025 as a year of reset for the economy in the midst of dealing with U.S.-imposed tariffs, paving the way for a more stable 2026.

Despite the Canadian economy grounding to a near-halt due to tariffs the country is expected to avoid a major downturn, the report says.

Deloitte also predicts that the Bank of Canada will lower its interest rate to 2.25 per cent by the end of the year.

The bank recently lowered interest rates to 2.5 per cent this month, the first cut since March. The next announcement is set for the end of October.

Tariffs had the biggest impact on manufacturing industries, with steel, aluminum and auto sectors hit the hardest, particularly in Ontario.

The province saw a loss of nearly 50,000 jobs in 2025, leading to an unemployment rate above the national average around 7.8 per cent since April.

The report indicates that businesses have been reluctant to invest because of the tariff uncertainty.

Despite the uncertainty, signs point to an improvement in 2026 with more clarity in trade decisions, guidance from the federal government and projected lower interest rates.

All eyes will be on the federal government’s budget due out Nov. 4.

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