A new report forecasts Canadian growth will slow to 1.5 per cent this year from 1.7 per cent in 2025.
Dawn Desjardins, chief economist at Deloitte Canada, says she is cautiously optimistic though that the economy will gain momentum through the second half of the year.
She says two key trends to watch this year include trade and investment, with the review of the Canada-U.S.-Mexico free trade agreement scheduled for July, and the federal government’s plans to stimulate billions in investment from the private sector outlined in its latest budget.
Desjardins says the CUSMA review will be pivotal, and potential changes that restrict or eliminate access to the key American market present a risk, but her baseline assumption is that Canada will be able to maintain its favourable trading relationship with the U.S.
She also says the Canadian economy may hit a turning point on business investment as firms get more clarity and see support from the federal government, particularly in the infrastructure and natural resource sectors.
In the short term, she says government spending on defence and assistance provided to sectors impacted by U.S. tariffs will also help the Canadian economy.
Despite the slow start to 2026, Desjardins says the economy will likely pick up steam.
“Overall growth is probably going to be a bit slower than in 2025. But when we’re thinking about the setup for 2027, if we’re correct about this momentum building in 2026, the second half, I think it sets up nicely for 2027,” she said.
This report by The Canadian Press was first published Jan. 7, 2026.
Daniel Johnson, The Canadian Press