Canadian economy to see reasonable growth in Q1 2025 but tariff threat looms: CFIB forecasts
TORONTO, Jan. 17, 2025 /CNW/ - The Canadian economy is expected to grow moderately in the first quarter of 2025, finds the latest Main Street Quarterly report by the Canadian Federation of Independent Business (CFIB).
Key highlights of the Q4 2024 edition of the Main Street Quarterly report
- CFIB's estimates and forecasts in partnership with AppEco suggest the Canadian economy grew by 3.2% in Q4 2024 and will moderate at 2.5% in Q1 2025. The Q4 estimate for the total Consumer Price Index (CPI) inflation dropped to 2.1% in Q3 and should stabilize around the Bank of Canada's target of 2% year-over-year in Q1 2025.
- Driven by an increase in long-term small business confidence, private investment rebounded in the last quarter of the year, and the pace is set to pick up in 2025 after a disappointing performance in 2024.
- The Q4 2024 private sector job vacancy rate remained almost unchanged at 2.7% in Q4. This represents 378,300 unfilled positions.
- A special analysis this quarter focuses on the looming U.S. tariffs and their potential impacts. A strong majority (82%) of Canadian businesses—both exporters to and importers from the U.S.— expect significant impacts on their operations if new tariffs are imposed on Canadian products.
- The quarterly sectoral profile reveals that firms offering professional, business, and financial services, have become less optimistic in the past two years, but they still outpace the all-industry optimism average.
Conclusions by CFIB's chief economist and vice-president of research, Simon Gaudreault:
- Given a strong trade relationship between Canada and the U.S., a 25% tariff on Canadian products would likely drive inflation in Canada, causing price hikes and loss of customers, and heavily impact small- and medium-sized businesses already struggling with weak demand.
- While we forecast the Canadian economy will remain healthy in the first quarter of the year, the results don't take into the account the looming U.S. tariff threat, the GST/HST tax break, uncertainty around capital gains, among other issues facing small businesses. It's important now more than ever to balance the economic environment and create conditions where small- and medium-sized businesses can thrive and compete.
About AppEco
AppEco is a consulting firm specializing in economic and strategic analysis. It possesses in-depth technical expertise and delivers first-class services in applied economics: economic impact studies, surveys and polls, cost-benefit analyses, modelling, econometrics, pricing, etc. Its mission is to provide useful services that contribute to economic growth and the success of clients' projects. AppEco works with firms of all sizes, from small to multinationals, as well as governments and non-profit organizations. Learn more at appeco.ca/en.
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada's largest association of small and medium-sized businesses with 100,000 members across every industry and region. CFIB is dedicated to increasing business owners' chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.
SOURCE Canadian Federation of Independent Business