Canadian economist warns of looming recession risk

Steel workers work at the ArcelorMittal Dofasco steel plant in Hamilton, Ont., on Wednesday, March 12, 2025. THE CANADIAN PRESS/Nathan Denette

Canadian economists are sounding the alarm about a potential recession as global markets experience turbulence along with widespread economic disruptions due to the U.S. trade war.

“We’ve already had a bit of a taste of this,” said Don Drummond, former chief economist of TD Bank, in an interview with CTV News Channel on Sunday.

He pointed to flat employment growth in February and the recent loss of 33,000 jobs in March, stating, “I think that’s a precursor of weakness we’re going to have, particularly in the automobile sector.”

Drummond also expressed concerns that the global economic slowdown could deepen, leading to widespread job losses in Canada.

“We’ve been fortunate in the last couple of years. Our unemployment rate, by historical standards, has been quite low, below 7 per cent, but in past recessions, it has typically gone above 10 per cent and stayed there for quite some time,” he said.

Drummond warned that Ontario alone could lose as many as half a million jobs if a recession takes hold.

“I don’t think that’s a far-fetched possibility,” he said, noting that the impact south of the border would also be significant, partly due to a reduction in imports.

“That’s going to freeze their production processes and lead to layoffs as well,” Drummond said, also pointing to the global economic landscape, referencing countries like Vietnam and Australia, which are facing significant tariffs despite not having the same trade imbalances with the U.S.

Drummond suggested these unresolved trade issues could lead to a prolonged economic downturn.

“We’re not seeing signals that this can have an early resolution. It suggests that it may go on for some time,” he said.