Outcome of U.S. election a potential downside risk to Canadian economy: report
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‘Canada is therefore more vulnerable to protectionist trade policy from the U.S., which could limit the expected GDP (gross domestic product) offset from Canadian business investment and trade,’ TD Economics wrote in a recent report.
A TD Economics report identifies the U.S. presidential election as the biggest downside risk to the Canadian economy. While Canada narrowly avoided a recession last year and has shown resilience in 2024, the report warns that potential U.S. protectionist trade policies could threaten Canada's economic stability, especially since the country has increased trade with the U.S. and Mexico while reducing reliance on China. Although consumer spending may slow, business investment, government spending, and increased exports could offset this. The report also discusses potential impacts of population growth cooling due to new government restrictions on non-permanent residents, which could affect economic forecasts and Bank of Canada policies.
BNN Bloomberg’s Daniel Johnson writes that “a large number of homeowners in Canada will also face higher interest rates when they renew their mortgage,” noting the report said this is despite expectations that the Bank of Canada will lower rates going forward.
“With consumer spending expected to slow going forward, we are optimistic that a mixture of business investment, government spending, and increased exports could be a counterweight,” TD Economics said in the report.
