As 2024 comes to a close, the Canadian business landscape has been bustling with activity. The Bank of Canada’s decision to lower interest rates amidst moderating inflation and the labor unions’ quest for progress have marked this year. Looking ahead to 2025, new challenges and opportunities are on the horizon. Here are five key areas to keep an eye on in Canadian business for the upcoming year:
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Canada-U.S. Relations
- As Donald Trump prepares to take office on Jan. 20, the focus shifts to the impact of his presidency on Canadian businesses. Trump’s threats of imposing significant tariffs unless Canada and Mexico curb the flow of migrants and illegal drugs into the U.S. have caused concern. Sébastien Mc Mahon from iA Global Asset Management emphasizes the importance of Trump’s initial actions, which will set the tone for future relations.
- Mc Mahon suggests that Trump’s negotiation tactics, as outlined in his book "The Art of the Deal," may be at play. The uncertain outcomes of potential tariffs raise questions about the future of trading relationships.
- The renegotiation of the free-trade agreement between Canada, the United States, and Mexico in 2026 adds another layer of complexity to the situation.
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Stock Markets
- The Canadian stock index hit record highs in 2024, crossing the 25,000-point threshold for the first time. Financial and technology sectors played a significant role in driving market growth.
- Anticipated benefits from Trump’s corporate tax cuts and deregulation in the U.S. are expected to positively impact Canadian businesses. Mc Mahon predicts that Canadian stocks have room to rise based on pricing and earnings expectations.
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Federal Election
- Canada’s federal election in 2025 could result in a change of government, with the Conservatives leading in polls. The Tories have proposed plans to end the carbon tax and reduce spending, offering an alternative approach to governing.
- Expectations for the election date point to either spring or the fixed date of Oct. 20, 2025. The Tories’ differing policies from the Liberal government have shaped the political landscape.
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Real Estate
- Despite falling mortgage rates, the housing market in major Canadian cities continues to face challenges, with high prices hindering property ownership. Real estate experts, like Davelle Morrison, anticipate a turnaround in 2025.
- Lower interest rates and policy changes are expected to attract buyers, although a return to the unprecedented market dynamics of previous years seems unlikely.
- Labour
- Labor disputes characterized 2024 as unions sought to address losses incurred during periods of inflation. Government intervention in disputes at railways and ports led to legal challenges from affected unions.
- While inflation has stabilized, unions may pursue wage increases to compensate for lost purchasing power, creating a potential for further labor unrest.
As Canadian businesses brace for the challenges and opportunities that lie ahead in 2025, proactive measures and strategic planning will be key to navigating the evolving landscape. Stay informed, stay agile, and be prepared for what the new year brings.
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