Canada’s economy is heading into rough waters once again. A new report from Oxford Economics warns that ongoing trade disputes could tip the Canadian economy into a recession lasting through the end of 2025, despite efforts to boost defence spending.
The July 17 report paints a sobering picture: GDP contraction, rising unemployment, and the potential for significant job losses if trade war tensions continue escalating through Q3 and Q4.
Report’s Economic Projections:
- GDP expected to shrink by 0.9% by Q4
- Unemployment rate projected to climb to 7.4% (from 6.1% in early 2025)
- Up to 180,000 jobs at risk, particularly in manufacturing, transport, and export-heavy industries
- Consumer confidence forecast to decline, especially among middle-income households
Despite federal tax relief measures introduced earlier this year, investor sentiment is cooling, and concerns about long-term stability are growing.
“Canada’s defence investment is vital. But it won’t shield the economy from the ripple effects of a prolonged trade war,” the report notes.
Trade War: The Core Threat
The expected downturn is mainly due to rising trade tensions with major partners like the U.S. and China. Tariffs, supply chain issues, and retaliation are hurting Canada’s trade balance and weakening business confidence.
Many Canadian businesses are already holding off on growth, cutting back on hiring, and preparing for tougher financial conditions.
What Should Canadians Do?
While the forecast may seem grim, now is the time for proactive planning and a recession-resilient strategy.
Smart financial moves to make right now:
- Build or bolster your emergency fund (aim for 3–6 months of expenses)
- Diversify your investments to reduce reliance on any one sector or market
- Review and reduce high-interest debt to improve cash flow flexibility
- Seek professional financial advice before making large financial moves or asset reallocations
Final Thoughts
In the event of economic uncertainty, preparation is your greatest asset. The time to strengthen your financial foundation is now.
At Legend Fusions, our team of experts can guide you through financial planning, debt management, and investment strategy. Even when the markets get turbulent, you will have peace of mind that you were prepared!
📩 Book a free financial strategy session and future-proof your finances today.
Jeffrey Ross
Jeffrey Ross is an experienced tax accountant focused on US-Canada cross-border taxation, with over three years in the industry, including a key role as client manager at a Canadian tax firm. He provides expertise in corporate and personal tax planning, specializing in non-resident tax, capital gains, CRA and IRS compliance, and retirement planning. Known for his personalized approach, Jeffrey is dedicated to guiding clients with clear, practical advice tailored to complex tax scenarios, aligned with the evolving tax laws.