1303 ET - The fresh salvo of U.S. tariffs that Canadian exporters now face is likely to push Canada's economy into a recession that while moderate is likely to lead to permanent damage, Capital Economics reckons. The research firm expects GDP growth will average 1.2% this year, 0.7% in 2026 and 1.4% in 2027 as tariffs drag on the economy via a hit to exports and indirectly through lower investment and consumption. Where the damage becomes long-lasting is in the reduction to potential GDP, Capital says. Still, it expects the recent scrapping of the federal carbon tax on consumers reduces the risk inflation rises above the Bank of Canada's 1%-3% target range and leaves scope for the policy interest rate to be cut to 2%.(robb.stewart@wsj.com; @RobbMStewart)

(END) Dow Jones Newswires

March 27, 2025 13:03 ET (17:03 GMT)

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