Canada is headed towards a recession this year, and now is the time for Canadians to prepare for a financial downturn, according to a Wells Fargo report.
In its International Economic Outlook: April 2025 report, the company highlights its economic forecast, stating that economies exposed to tariffs are expected to underperform.
"In that sense, we now believe Canada's economy will enter technical recession this year," states the report. It also predicts that the Bank of Canada will likely ease interest rates due to concerns about inflation.
However, tariffs aren’t the only factor that will have a direct impact on Canada's economy — the indirect effects of sentiment and confidence are also expected to contribute to the recession.
And an already weak loonie is also likely to get even weaker.
Wells Fargo predicts that the Canadian dollar "will be a relative underperformer.” According to currency exchange company XE, as of April 29, the current conversion rate is $1 USD to $1.38 CAD, but by late 2026, the exchange rate could worsen, approaching a conversion rate of $1 USD to $1.48 CAD.
The economic forecast certainly looks grim, but what would a technical recession mean for Canadians?
Natasha Macmillan, director of Everyday Banking at Ratehub.ca, told us that markets and consumers will likely be more cautious during periods of uncertainty.
"A technical recession, even a mild one, will affect Canadians differently depending on their industry, location, and personal financial situation," she said. "We are entering a period where governments, companies, and individuals must be prepared for a wide range of outcomes."
Macmillan shared advice for how Canadians can better protect themselves during a recession:
As Canada faces a potential recession, Canadians must focus on strengthening their financial foundations.
"Focusing on building savings, securing fixed borrowing rates where possible, and cutting back on non-essential spending can make a real difference in staying resilient through potential challenges," she said.
Davslens/Shutterstock.com
Join the conversation Load comments