Deloitte Canada is the latest advisory firm to issue a forecast for the Canadian economy saying signs point to further slowdown, but with some recovery in 2026. Across the board, forecasters are emphasizing the importance of the ongoing Canada-U.S. trade talks and other aspects of international affairs in the outlook.

Deloitte is expecting Canadian Gross Domestic Product (GDP) growth at 1.1 per cent this year but a higher pace of 1.6 per cent next year, based on information available in June. Like other forecasters, chief economist Dawn Desjardins said it all depends on having greater clarity regards to what will happen with trade relations and U.S. tariffs.

“It’s really extraordinarily difficult at the current time because there’s so much going on globally and so much going on in the United States,” she told Atlantic Business Magazine. The sentiment is echoed in reports coming from Canadian banks and other financial advisors.

On June 17, TD highlighted the “wild ride” related to changes in government policies since a prior forecast in March. “It remains highly uncertain what path U.S. tariff policy will take, the biggest wildcard in our forecast,” the report stated.

A similar note came from CIBC Capital Markets. “Putting out a U.S. forecast these days is risky business. We’re crossing our fingers and silencing our notifications with the hopes that our assumptions don’t become irrelevant after the next tweet or court ruling,” wrote economist Ali Jaffery.

Deloitte’s Desjardins said, for Atlantic Canada, there are federal decisions beyond trade, specifically around defence-related spending, with the potential to play an outsized role in ending the economic slowdown and affecting higher economic growth. Nova Scotia, which claims to be home to more than 40 per cent of the country’s military assets, is arguably poised to do well from increased defence-related spending. However, Desjardins said, details around where federal defense dollars will flow are still to come.

At the NATO Summit this week, Prime Minister Mark Carney committed to spending the equivalent of five per cent of Canada’s GDP by 2035. The country has yet to meet a two per cent target, despite having re-committed to it earlier this year.

Desjardins said the Nova Scotia government’s commitment to supporting new exploration of critical minerals points to other potential supports going forward for the provincial and regional economy.

In Newfoundland and Labrador, Deloitte forecast 1.9 per cent economic growth in 2025, driven by oil and mining operations; Prince Edward Island will be aided by public investments in home construction; and New Brunswick is looking at 0.6 per cent growth this year thanks to mining, home builds and projects with federal infrastructure funding.

On the downside, the region is challenged by Chinese tariffs on seafood and, in the longer term, changes in immigration.

Before their next reports, forecasters say they are looking for signs of greater stability in Canada-U.S. trade relations. They’re also going to be watching for major project commitments and to see if Canadian business sentiment overall is responding to the promises and actions by the federal and provincial governments.

“Because once we start to see some (new) investment happening, that will lead to hiring, that will lead to improved consumer confidence as well,” Desjardins said.

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