Photo: Wayne Moore

Pierre Cleroux

Canada will not feel the effects of a recession in 2025.

That's according to the chief economist with the Business Development Bank of Canada.

Speaking at a Kelowna Chamber of Commerce luncheon Wednesday, Pierre Cleroux said while uncertainty around tariffs and the economy still remain, the expectation is the Canadian economy will show a very modest gain this year.

With the forces of lower interest rates stimulating the economy and uncertainty around U.S.-led tariffs slowing the economy down, he expects a 0.8 per cent increase in the economy this year.

“Not a recession but growth is going to be quite modest. A bit lower than last year despite the fact the interest rate is much lower,” said Cleroux.

“That’s the impact of the tariffs.

“Two months ago when the U.S. administration announced tariffs on Canadian goods in all sectors our forecast was negative growth — a recession.”

Cleroux said the threat of tariffs are enough to have a negative impact on the economy but not enough to cause a recession.

He also expects the Bank of Canada to drop its prime lending rate from its present 2.75 per cent in the summer and, by the end of the year, anticipates the rate to be as low as two per cent.

But, as Canada shows modest growth, Cleroux expects B.C.’s economy to outpace the rest of the country.

While nearly half of British Columbians expect to spend less over the next 12 months and the housing market is in decline like the rest of the country, he said B.C. has two things going for it.

A more diverse export market and little reliance on steel and automobile exports.

“Just 53 per cent of exports are going to the U.S. compared to almost 80 per cent for the rest of the country so the direct negative impact is not going to be felt the same way.”

Cleroux said B.C.’s economy should show a growth of about 1.1 per cent, still lower than 2024 but better than the rest of the country.

He added the fear and uncertainty around tariffs is waning across the country.

Economically, “the worst is behind us.”