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flag Canada's defense spending boost expected to slightly increase GDP, but recession looms due to trade uncertainties.

flag A new report by Oxford Economics indicates that Canada's increased defence spending will only marginally boost its real GDP by 0.1 percentage points this year and next, reaching 0.9% growth annually in 2025 and 0.4% in 2026. flag Despite these plans, the report suggests that Canada is still headed for a recession, with ongoing U.S. trade policy uncertainties and new tariffs causing firms to delay investments, leading to job cuts and increased unemployment. flag The Bank of Canada is expected to maintain a policy rate of 2.75%, but inflation is predicted to rise to 3% by mid-2026, limiting monetary stimulus options.

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