How Canada’s Economy Has Navigated Global Uncertainty

Interviewer:
Joining us now is Kim Inglis, Senior Portfolio Manager at Raymond James. Well, Kim, it's great to have you back with us. First, there's been a lot of chatter lately around interest rates and inflation. What's your take on where things are headed? 

Kim Inglis:
Yeah, so definitely a lot of talk about both. So for interest rates, analysts in general are expecting about two cuts this year and likely at least two next year. In terms of timing of this year's cuts, they're expected to be more towards the end of the year, so on the fourth quarter, which would of course be when the economy starts to feel the impact of tariffs. That's because companies have been busy anticipating the in tariff, so they've been building inventory and that sort of thing. So we could see a slowdown as they work through some of that inventory. Also, consumer spending is expected to decrease a little bit, just naturally as consumers would get some of that, start to feel some of that sticker shock with the tariffs. In terms of inflation, you could see a little bit of movement with that, obviously again, due to the tariffs, but it is still expected to stay in that two to three percent sweet spot, as they say. 

Interviewer:
What are some of the near-term challenges, Kim, that you're watching for the markets? 

Kim Inglis:
Definitely, tariffs are going to be the name of the game. They're still going to remain very topical, dominate the headlines, of course. I would say in terms of challenges with that, would be the fact that they're anticipated that the average tariff across all the various tariffs that are happening at the current moment, that the average would be somewhere in between 15 to 17 percent, which is of course quite a bit more than was originally expected, which was around 10 percent. You could see some bumpiness with that. Of course, if that causes a slowdown, then slowdown would drive down earnings estimates and that sort of thing, which would of course then put a damper on the markets. Then in terms of other things, geopolitical tensions, those always could pop back up. If there's one thing humans are good at, that's causing conflict. That's always a potential challenge. Then from a seasonal perspective, we are still in the summer months and the summer months do tend to be a bit more volatile on average, you'd see about a seven percent pullback. I would say that those would be the most topical of the potential near-term challenges. 

Interviewer:
Looking a little further ahead, what does the 2026 economic outlook look like? 

Kim Inglis:
I would say that all things considered, things are looking pretty decent for next year. In terms of GDP growth estimates, it's expected to be about 1.4 this year, taking up to about 1.5 next year, so a little bit of growth there. If we do see interest rates go down, then that would of course be a creative to the markets. They would generally be pretty happy about that. Then there's the one big beautiful tax bill. That from at least a financial market standpoint is expected to add some growth . If you think about it, the reason for that makes sense. Markets are comprised of a bunch of companies, and if companies do well, then the markets tend to do well. If things are happening that are business-friendly activities, like tax cuts of deregulation, then that would obviously translate into good news for companies, and therefore good news for the markets. 

Interviewer:
With all the volatility that we've seen, Kim, would you say that the bull market is still intact? 

Kim Inglis:
We're definitely still early in the bull market. We're less than three years in, on average, a bull market lasts about five and a half years, and produces a gain on average of about 190 percent. We're nowhere near those numbers, so definitely some room for growth there. Right now, we are, as I mentioned, dealing with some fair level of uncertainty as it relates to the tariffs. But once those start to clear up and there's a little bit more clarity on that situation, then I think that an investor sentiment would improve. Then, as I mentioned as well, if interest rates go down and maybe things move a little quicker with the tax bill, then that could make markets happy. 

Interviewer:
How has Kim, as an economy and market been navigating all of this global uncertainty? 

Kim Inglis:
Canada has, our markets have definitely calmed considerably, especially as it relates to earlier this year. I would say the Canadian markets are taking things a little bit more in stride, not reacting quite as much on the day-to-day moves. Our June job reports, that was good, our unemployment ticked down. From an economic perspective, Canada is showing a fair bit of resiliency there. But of course, the big question mark right now is the ongoing conversations, we will say, between Canada and the US as it relates to the tariffs. That is still very fluid at the moment, so that could cause some bumpiness for Canada, for sure. Particularly, if those tariffs end up being a bit more retaliatory in nature, then Zoc could take a while to work through the system. So, there's some pluses and minuses going on at the moment with Canada. 

Interviewer:
Certainly, well, Kim, thank you so much for being with us today. 

Kim Inglis:
Thanks for having me. 

Interviewer:
And thank you to everyone watching. Once again, that was Kim Inglis, senior portfolio manager at Raymond James. And I'm your host, Jenna Dagenhart with Asset TV.