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All good things must come to an end: Economic slowdown on the horizon, predicts Deloitte Economic Advisory

Toronto, October 11, 2018 – The Canadian economy is at a crossroads in the business cycle: either strong economic growth will lead to inflationary pressures, or growth will slow to a more moderate and sustainable rate of expansion. Deloitte Economic Advisory, in its first outlook, anticipates the latter—that the Canadian economy will gear down.

Real GDP growth in Canada is expected to slow to 2 per cent this year, edge slightly lower in 2019 and fall to 1.4 per cent by 2020. This will reflect weaker consumer spending and the impact of a slowing global economy, with US protectionism still posing a key international risk. Tighter monetary policy in North America and Europe will also play a role in tempering growth, but such policy also presents risks.

“The signs that the North American economy is in the late stages of a business cycle are all around us, from a record long bull market in US equities to low unemployment rates and rising central bank rates,” says Deloitte Canada’s Chief Economist, Craig Alexander. “The negotiation of USMCA reduces the downside risks to the Canadian economy, and economic growth should persist. However, businesses should still prepare for more moderate domestic demand growth and a weaker US economy over the medium term.”

To download the first report from Deloitte Economic Advisory, visit

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Key findings:

  • Pace of economic growth decelerating in Canada: After robust 3 per cent growth in 2017, Deloitte expects the Canadian economy to grow 2 per cent in 2018 and slow to 1.4 per cent in 2020
  • Consumer spending cooling off: High household debt, rising interest rates, flat real estate markets, and weaker employment growth will all temper consumer spending in 2019 and 2020
  • Cautious growth in business investment: The cloud of uncertainty created by the renegotiation of NAFTA has been lifted, a positive for business investment. Capital spending will be a larger contributor to economic growth in 2019 and 2020, but firms are still expected to be cautious in their outlays
  • World economic growth slowing: The global economy is expected to deliver strong growth of close to 4 per cent in 2018, but the pace of expansion will drop to 3.2 per cent in 2020
  • US economic cycle will play key role: Real GDP to climb 3 per cent this year, fuelled in part by tax stimulus. But as stimulus declines, fiscal drag will kick in; growth is expected to slow to well below 2 per cent by 2020.

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