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The Parliamentary Budget Office has trimmed its outlook for economic growth for this year and next amid new U.S. tariffs and Canadian countermeasures.<\/p>\n
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.<\/p>\n
The forecast is down from estimated growth of 1.1 per cent and 1.6 per cent, respectively, issued in June.<\/p>\n
“Canada faces a more challenging economic and fiscal outlook than we projected in June,” Annette Ryan, parliamentary budget officer, said in a news release.<\/p>\n
“Additional trade measures and ongoing uncertainty are weighing on growth in real output \u2014 what we produce as a country.”<\/p>\n
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.<\/p>\n
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.<\/p>\n
Relative to its June outlook, the deficits are $3 billion higher per year on average over 2026\u201127 to 2030\u201131, as new spending measures more than offset stronger revenues, the watchdog said.<\/p>\n
“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.”<\/p>\n
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.”<\/p>\n
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 mid-year.<\/p>\n
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.<\/p>\n","protected":false},"excerpt":{"rendered":"Listen to this article Estimated 2 minutes The audio version of this article is generated by AI-based technology.…\n","protected":false},"author":2,"featured_media":940307,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":["post-940306","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/940306","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=940306"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/940306\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/940307"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=940306"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=940306"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=940306"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}