A recession should just about be avoided, but the economy is teetering on the edge. We expect GDP growth to average less than 1% annualised over the second half of the year, with the unemployment rate rising toward 7.5%. As the government has scrapped many of its retaliatory tariffs, the Bank of Canada has the green light to resume cutting interest rates. We forecast two more 25bp cuts in this cycle, but the risks now tilt to the Bank going further than that.
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