UBS Says Canada's Economic Slowdown Likely Bottomed Out, Sees GDP Growth of 1.5% in 2025

11:00 AM EST, 11/12/2025 (MT Newswires) -- Canada activity slowed in mid-2025, but as UBS anticipated, the worst appears to be over.

Gross domestic product growth is tracking below 2%, wrote the bank in a note to clients.

Labor market conditions softened notably through mid-2025, which, in the view of UBS, is one key factors behind the recent policy easing by the Bank of Canada.

Another is the retrenchment of inflation risks with Canada withdrawing reciprocal tariffs against the United States and a growing number of Canadian firms complying with the USMCA trade agreement.

The bank views risks to its outlook as roughly balanced.

Additional fiscal support can be more growth-accretive than UBS has currently baked in. Specifically, the government's housing initiatives on top of monetary policy easing, may improve infrastructure and residential investment, and the Canadian consumer may deliver positive surprises if rising housing activity helps renters and first-home buyers -- provided house prices don't decline noticeably such that existing owners and stakeholders lose asset value.

On the other hand, a potential deterioration in global financial conditions or renewed strains in Canada-U.S. trade relations could weigh on the outlook, added UBS.

The bank predicts GDP growth of 1.5% this year and of 1.8% in both 2026 and 2027. Canadian GDP expanded 1.6% last year.

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