Economic Outlook: Safeguarding a Vital Relationship and Investing in a More Productive Economy

President-elect Trump’s threat to impose an across-the-board 25 percent tariff on US imports from Canada and Mexico immediately upon taking office is heightening already elevated economic uncertainty. Over the next weeks and months, a priority for Canada is safeguarding our relationship with the United States and advancing our national and economic security in a fragmented world. The economic outlook is clouded by recent policy developments. A plausible scenario for Canada is one of modest growth, low inflation and lower interest rates, but there are significant risks, mostly to the downside. For planning purposes, businesses must contemplate a range of scenarios. Over the medium term, our foremost task in Canada is raising real incomes by correcting a trend of low productivity growth. This requires driving investment and innovation where the returns are greatest and seizing opportunities to grow high productivity activities. 

With opening remarks from Senior Advisor David Dodge, this presentation of the 2025 Economic Outlook featured Senior Advisor Serge Dupont and Paul Beaudry, Professor of Economics at the University of British Columbia, as they reviewed recent developments in the United States and Canada, and the potential impacts of policy shifts for output, inflation and interest rates in the two economies. For Canada, they emphasized the need to safeguard the Canada-US relationship, enhance national and economic security, and develop and implement a strategy to strengthen productivity growth. Moderated by Claire Kennedy, the presentation and Q&A provided valuable insights to plan in today’s uncertain world.