Canada’s Economic Slowdown Could Be Good for the U.S.: Kiplinger Economic Forecasts

The country is still in growth mode but only just, with several factors set to weigh on it.

Canada flag and USA flag side by side
(Image credit: Getty)

Canada is one of our closest neighbors and a major trading partner, so its fortunes have a big bearing on our economy. To help you understand how its economy is performing and what we think will happen across the borders in the future, our highly experienced Kiplinger Letter team will update you on the latest news (Subscribe to The Kiplinger Letter or get a free issue). Here’s the latest forecast…

The Canadian economy is heading toward a slowdown, but not a recession, which is good news for cross-border trade with the U.S., since Canada is America’s no. 2 trade partner. 

Recent data show that Canada’s GDP rose by 0.5% in January from the previous month, and early February data show a similar pace of growth.

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Canada’s job market continues to add jobs, keeping the jobless rate at a record low.

Several factors will weigh on Canada’s economy this year. The prevalence of variable-rate mortgages means interest costs for Canadian households have risen relatively quickly. Firms have also indicated that they expect a decline in future sales as consumers start to feel the full impact of higher interest rates on their finances.

The Bank of Canada has likely reached the end of its rate-hiking cycle, making it the first major central bank to do so in the face of slowing economic growth.

This forecast first appeared in The Kiplinger Letter. Since 1925, the Letter has helped millions of business executives and investors profit by providing reliable forecasts on business and the economy, as well as what to expect from Washington. Subscribe to The Kiplinger Letter or get a free issue. In the letter you will get regular updates on the Canadian economy and on the general world economy, so you know what is going on outside of the U.S.  

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Rodrigo Sermeño
, The Kiplinger Letter

Rodrigo Sermeño covers the financial services, housing, small business, and cryptocurrency industries for The Kiplinger Letter. Before joining Kiplinger in 2014, he worked for several think tanks and non-profit organizations in Washington, D.C., including the New America Foundation, the Streit Council, and the Arca Foundation. Rodrigo graduated from George Mason University with a bachelor's degree in international affairs. He also holds a master's in public policy from George Mason University's Schar School of Policy and Government.