Canada in 2025: The Canadian Credit Union Association’s Economic, Policy, and Social Outlook
The Canadian Credit Union Association (CCUA) hosted its 2025 Annual Economic, Policy, and Social Outlook webinar, which examined the economic, policy, and social forecasts for the upcoming year and the challenges and opportunities that lie ahead for business leaders.
The Outlook featured insights from industry experts:
· Dawn Desjardins, Chief Economist, Deloitte (Economic Outlook)
· Victoria Mainprize, Vice President, Policy and General Counsel, CCUA (Policy Outlook)
· Jeremy Kronick, Vice-President, Economic Analysis and Strategy, C.D. Howe Institute (Social Outlook – Productivity Fireside Chat)
The session provided a detailed analysis of Canada’s anticipated trajectory in these three domains. Here are some of the key takeaways and insights into what lies ahead for this year:
Economy: Leadership changes and geopolitical risks create challenges
Canada’s economy is projected to face significant challenges in 2025 amidst global geopolitical risks, trade frictions, and substantial leadership changes in key countries, including Donald Trump’s return to the U.S. presidency and Justin Trudeau’s resignation.
The global economy is anticipating a modest growth rate of 3%, driven by easing inflation and interest rates. Examining the performance of Canada’s economy, economic momentum was on the rise in the first half of 2024, but this tapered off in the latter half due to reduced immigration targets and growing uncertainty among consumers and businesses. U.S. tariffs on Canadian goods, which are anticipated to go into effect in 2025, could further complicate matters and, if implemented, have the potential to devastate the nation’s economy.
That said, this presents a unique opportunity for Canada as its weakened national currency makes its exports more cost-effective for other nations and thus opens the doors for the country to foster new trading relationships, which could offset the economic pressures brought on by these tariffs.
Productivity remains a major concern, with Canada lagging behind the U.S. in output per worker for decades. Modest employment growth is expected next year, supported by easing interest rates and inflation nearing the Bank of Canada’s 2% target. However, risks from excess savings, slower population growth, and heightened trade tensions persist.
Policy: Five key national priorities for 2025
The credit union sector’s 2025 policy agenda will focus on five key issues: growth, stability, modernization, financial crime prevention, and ESG. Credit unions face membership growth and competitiveness challenges, with mergers and regulatory amendments as key focus areas.
The financial sector seeks proportional regulations to balance stability with innovation. Modernization efforts in the new year, including open banking and digital payment systems, aim to address rising operational costs and consumer expectations. Combating financial crime has become critical within the financial sector, with fraud and scams costing Canadians $542 million annually and primarily targeting vulnerable groups (seniors and Canadian youth). Additionally, climate risk management and housing affordability continue to dominate ESG discussions while regulators emphasize stronger governance to enhance financial sector resilience.
Social: Closing Canada’s productivity gap
There is no denying that Canada has a productivity problem. Productivity in Canada continues to fall behind other G20 nations due to many barriers, including limited interprovincial trade and delayed adoption of technologies like real-time rail payment systems. Small and medium-sized enterprises (SMEs), which employ 85% of the private workforce in Canada, play a key role in the country’s innovation; however, their struggle to scale limits their productivity gains.
Demographic shifts, including an aging population and restricted immigration, further threaten economic output. To address these challenges, credit unions can foster SME growth and advocate for policies that encourage innovation and competition. Improved productivity is essential to managing future inflation and sustaining long-term economic growth.
Conclusion
The year ahead presents significant challenges for Canada, with geopolitical tensions, economic uncertainty, and structural productivity issues. However, opportunities exist to strengthen financial stability, foster small business growth, and modernize systems.
Collaboration between government, financial institutions, and credit unions will be crucial to navigating these complex dynamics in 2025. CCUA continues to champion the needs of its members by driving innovative solutions, advocating for proportional policies, and fostering a stronger, more resilient credit union sector.