The local economy should not be overly impacted by higher tariffs on imports into the U.S., the Conference Board of Canada predicts, but could be slowed by a reduction in the size of the federal civil service.
The Conference Board shared its 2025 economic outlook for the Ottawa-Gatineau region on Tuesday. Principal economist Richard Forbes said that while uncertainty around tariffs as proposed by U.S. President Donald Trump could hit other Canadian cities hard, direct impacts in the nation’s capital should be minimal.
“Compared to other cities in the Canadian economy, Ottawa and Gatineau are pretty sheltered from potential tariffs from the United States,” he said. “It’s because the city is so concentrated in services. Nearly a quarter of jobs are in public services, but there’s also a pretty big presence in things like professional services, financial services, things that aren’t really tied to exports.”
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Still, the Conference Board report predicted that no city in Canada will be completely immune to blanket tariffs, “which would reignite inflation, stifling consumer spending and business investment,” and also create a level of uncertainty around 2025 predictions.
So far, however, Forbes said the outlook for the Ottawa-Gatineau region is positive.
“The overall outlook for 2025 is bright,” he said. “Interest rates have been coming down since the middle of last year and we do see them still coming down through April. We see another three-quarter point reduction by the Bank of Canada. The city suburbs are expanding. And there’s still a lot of work on the LRT to be done.”
According to the report, real GDP in Ottawa-Gatineau rose by approximately one per cent in 2024, representing a slower year for the local economy. In 2025, the Conference Board is forecasting it to advance 1.9 per cent, with 2.2 per cent gains projected for 2026.
Lower interest rates and a steady labour market are expected to bring short-term growth, adding 11,000 jobs in 2025, mostly in professional services and retail, the report said.
But significant cuts to the public sector could create some downsides, Forbes warned.
“One of the things holding back our overall outlook is the lack of potential in the public sector, which accounts for nearly a quarter of jobs in the whole city,” he said. “Last year, the federal government announced it was cutting 5,000 (jobs by 2028) across Canada, that they’re going to shed through attrition, mainly retirement. But a lot of those jobs are, of course, in Ottawa.”
Slower population growth is also expected to be a drag on the economy, the report said.
While Ottawa has seen strong population growth in the past two years, the federal government’s decision to cut back on non-permanent residents and immigration targets will stem the migration flow, slowing population growth locally, the report stated.