Canada is confronting a potential recession in 2025, with TD Economics forecasting the loss of up to 100,000 jobs due to a combination of economic pressures.

Key factors include the Bank of Canada's interest rate hikes aimed at curbing inflation, which have led to reduced consumer spending and business investment.

Additionally, the U.S. imposed tariffs further straining Canada's trade-dependent economy.

TD Economics anticipates that these challenges will result in a "shallow recession," characterized by two consecutive quarters of negative GDP growth.

The unemployment rate is expected to rise, with estimates suggesting it could peak between 7 and 9 per cent if the downturn deepens .

Sectors such as manufacturing, construction, and transportation are particularly vulnerable, especially in provinces like Ontario and Quebec, which are heavily reliant on exports.

Compounding these issues is the expiration of federal tax breaks, which has contributed to an uptick in inflation, with the annual rate rising to 2.6 per cent in February . This inflationary pressure, combined with the economic slowdown, is expected to impact consumer confidence and spending.

While the Canadian labor market has historically been less sensitive to downturns compared to the U.S., recoveries tend to be slower . The current economic landscape suggests that Canada may face prolonged challenges before achieving a full recovery. Financial Post