Bank of Canada survey: more firms expect recession within 12 months

The Bank of Canada has released a concerning survey showing a sharp rise in recession fears among businesses and consumers. The share of firms predicting an economic downturn in the next year surged from 15% to 32% in just three months, the central bank reported.

Pessimism fueled by US President Donald Trump’s tariff policies has led to a significant deterioration in Canada’s business climate, Reuters noted. Many companies have postponed investments and hiring plans as they revise their growth strategies, while concerns about rising costs linked to potential large-scale tariffs further complicate the outlook. Consumers, worried about their financial stability, are also cutting spending, adding pressure to the economy.

In its analysis, the Bank of Canada highlighted rising inflation expectations and a sharp decline in business optimism. However, the central bank acknowledged that its newly implemented support measures may not fully offset the negative impact of escalating trade tensions. Against this backdrop, markets are now pricing in another interest rate cut to 2.5%, Reuters reports.