The Parliamentary Budget Office has trimmed its outlook for economic growth for this year and next amid new U.S. tariffs and Canadian countermeasures.
In a revised outlook on Tuesday, the federal budget watchdog said it now projects real gross domestic product growth of 0.9 per cent for this year and 1.5 per cent in 2027.
The forecast is down from estimated growth of 1.1 per cent and 1.6 per cent, respectively, issued in June.
“Canada faces a more challenging economic and fiscal outlook than we projected in June,” Annette Ryan, parliamentary budget officer, said in a news release.
“Additional trade measures and ongoing uncertainty are weighing on growth in real output – what we produce as a country.”
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Trade talks between Canada and the U.S. broke down at the end of August followed by a new round of U.S. tariffs and Canadian counter-tariffs.
The PBO said it also now projects a budgetary deficit of $63.3 billion for the 2026-27 fiscal year, which will peak at $70.2 billion in 2027-28.
Relative to its June outlook, the deficits are $3 billion higher per year on average over 2026‑27 to 2030‑31, as new spending measures more than offset stronger revenues, the watchdog said.
“The PBO continues to maintain that debt-to-GDP ratio is an important benchmark for measuring fiscal health,” Ryan said. “It will rise steadily over the five-year horizon.”
She added: “Over the longer term, Canada’s economic and fiscal outlook will depend heavily on whether recent capital budget investments can translate into stronger productivity, economic capacity and prosperity.”
Meanwhile, the PBO assumes the Bank of Canada will start raising its policy rate in early 2027 “to keep inflation expectations anchored,” reaching 2.75 per cent by midyear.
On inflation, the watchdog expects higher energy prices will keep the annual inflation rate elevated in 2026, averaging 2.8 per cent, before easing to 2.4 per cent in 2027.
Ben, it is a trade war of our own making and either way that is no reason for more debt.
The government should be cutting to avoid unnecessary debt.
And, to be clear, inflation has been out of hand for far longer than Trumps term.
… So long as out of touch Liberals are in control.
@Ben. go on. forgive him for any wrong doing cause orange man bad.
“We agreed to pursue negotiations toward a deal within the coming 30 days.” Carney,June 2025.
“If you’re not at the table, you’re on the menu” January 20, 2026.
“Do things previously thought impossible at speeds we haven’t seen in generations.” May 21, 2025.
I find it difficult to support someone who lies so contemptibly. One who’s malignancy is so obvious when you look in his eyes.
But keep dissembling for dear leader Enjoy your poverty.
Apparently the new PBO lean has an honesty problem. I thought Carney tried to clearly dissuade this kind of thing when they didn’t appoint the interim PBO lead because he would actually criticism the government with silly things like statistics. ELBOWS UP! remain totally ignorant about things that are happening with you Government!!
Crash and burn cunada! It’s inevitable when run by clowns from outer space
If only the CCP stooges in the Liberal Party could copy some of China’s growth
We are in a trade war with the USA. We don’t expect 5% growth a year, or improvements to the bottom line. Our debt to GDP ratio is low. Now is not the time to worry about hypothetical forecasts.
The LPC won’t like that
The Canadian economy is in trouble folks and we are in for a rough ride….Trudeau the dràma teacher did immense damage creating more debt and dividing our country. Where do we start to fix it ?