Canadian fiscal and economic outlook projections

The Canadian Parliamentary Budget Office (PBO) has issued updated projections regarding the nation's fiscal health and economic growth. Initially, the PBO reported that the federal government was likely to miss its target of balancing the operating budget by 2028-29, potentially delaying the goal by one year. The watchdog also raised concerns regarding how the government categorizes spending between capital and operating costs.

Following the breakdown of trade negotiations with the United States in August and the subsequent imposition of tariffs, the PBO lowered its real GDP growth forecasts for 2026 and 2027. Additionally, budgetary deficits are expected to rise, with a projected $63.3 billion deficit for the 2026-27 fiscal year, peaking at $70.2 billion in 2027-28.

At the provincial level, Ontario is projected to face a $13.8 billion deficit this year. While the province has reportedly weathered American tariffs better than anticipated, officials noted that a slowing economy is contributing to these deficits.