5 hours Ago By Pamela Heaven
Oxford Economics predicts GDP will drop 1.3% between now and 2026 You can save this article by registering for free here . Or sign-in if you have an account.
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Create an account or sign in to continue with your reading experience. Sign In or Create an Account Canada may have dodged stiffer tariffs from the United States, but it’s hardly off the hook, warn some economists. Weaker global demand from the duties U.
S. President Donald Trump has imposed on the rest of the world and the “pervasive uncertainty” of the trade war will hit Canada’s economy hard this year, Oxford Economics said in a recent report. “Despite lower U.
S.-Canada tariffs, higher U.S.
tariffs on the rest of the world will significantly weaken U.S. and global demand and deepen the recession in Canada,” said Tony Stillo, Oxford’s director of Canada Economics and senior economist Michael Davenport.
Canada started the year on a high. The economy got an artificial boost in January as companies pushed more exports to the U.S.
ahead of tariffs and the federal government gave consumers a break on GST. Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.
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Please try again Interested in more newsletters? Browse here. Gross domestic product rose 0.4 per cent in January, slightly above expectations, but Statistics Canada’s early estimate suggests it stalled in February.
However, the trade war between Canada and the United States did show up in the labour market, as the unemployment rate rose to 6.7 per cent. The Oxford economists say U.
S. tariffs on other countries will weaken Canada’s exports, while “the trade war and pervasive uncertainty will paralyze private investment.” It now expects a 1.
3 per cent peak-to-trough drop in GDP between the second quarter of 2025 and the first quarter of 2026, a deeper decline than they projected last month. Not all economists are predicting a recession in Canada, but it did come up in the Bank of Canada’s monetary policy report this month. The central bank presented two scenarios.
In the first, in which most of Trump’s tariffs are negotiated away, the economy stalls in the second quarter. But in the second, in which the world is thrown into a lengthy trade war, Canada’s GDP shrinks in the second quarter and remains in a “significant recession” for a year. Oxford argues that uncertainty around U.
S. trade policy remains “exceptionally high,” and even if tariffs are scaled back, it will continue to hamper economic activity. There are already signs that the uncertain environment is curbing hiring, investment plans and housing activity and the economists expect the impact to grow the longer it persists.
Oxford predicts Canadian home prices will fall 8 to 10 per cent by mid 2026 and the loss of 200,000 jobs will drive the unemployment rate to 7.7 per cent in the second half of this year. Yet despite these somewhat grim predictions, Canada’s overall economic risk score is just slightly above the average for advanced economies, they said.
The report does, however, warn the effects of Trump’s trade war could linger for years to come, keeping business investment and productivity low. Oxford forecasts GDP growth will average only 1.9 per cent a year between 2030 and 2050.
In a worse scenario, where the trade war escalates, creating more barriers amid rising protectionism, growth could slow to just 1.1 per cent. Sign up here to get Posthaste delivered straight to your inbox.
Tariff uncertainty has thrown Canada’s housing market into a slump this year. Weaker sales and rising listings caused the national sales-to-new listings ratio to drop into a buyers’ market in March. At 45.
9 per cent, the ratio is the lowest since February 2009, said Maria Solovieva, an economist at Toronto Dominion Bank. Markets are “hugely tilted” in favour of buyers in Ontario and British Columbia, she said, the regions hardest hit by the housing downturn, but conditions are loosening even in the tight Alberta market. TD says these trends suggest that Canadian average home prices will slip further in the second quarter, following a 5 per cent drop in the first quarter.
Questions about the federal election and your taxes? Join us on Wednesday, April 23 at 12 p.m. to 1 p.
m. ET, when tax expert Jamie Golombek will answer questions about the implications of the political parties’ platforms on personal taxes in a live Q&A. With the CRA deadline nearing, there will no doubt be some last-minute tax talk, too.
Register now and we’ll send you a link to the live chat on April 23. McLister on mortgages Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.
Financial Post on YouTube Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more. Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg. Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.
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