A new study said Canada is heading towards a mild recession with rising borrowing costs, a downturn in the United States, and persistent inflation, exacerbating the country's economic uncertainty.

The recent economic forecasts from Deloitte Canada, released ahead of the federal budget on Tuesday, also said that tight monetary policy is set to pressure economic growth this year.

However, the research indicated that the recession will not be as deep as previously expected thanks to labor market resilience, which keeps income strong.

The report also expects real GDP to decline by 0.5 percent this year before rebounding with 2 percent growth in 2024, while inflation is expected to cool quickly throughout the rest of this year.

Deloitte said that the federal budget, scheduled to be presented in Ottawa on Tuesday afternoon, will likely include affordability measures to help low-income Canadians, support healthcare for provinces, and incentives to reduce carbon emissions.

The report also said these priorities should not have a significant impact on inflation - provided the spending increase is not dramatic.