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- calendar_today October 20, 2026
Parliamentary Budget Office Revises Canada Economic Forecast
The Parliamentary Budget Office (PBO) has lowered its outlook for Canada’s economic growth for the current and following year. The federal budget watchdog attributes the revised forecast to new U.S. tariffs and Canadian countermeasures, as well as the recent breakdown of trade talks between the two countries.
Impact of U.S. Tariffs and Canadian Countermeasures
Trade tensions increased after negotiations between Canada and the United States ended without a resolution in late August. This led to a new round of U.S. tariffs and swift retaliation with Canadian counter-tariffs, factors that the PBO says have weighed heavily on the nation’s economic outlook.
Reduced Projections for Economic Growth
The PBO now forecasts that Canada’s real gross domestic product (GDP) will grow by 0.9 per cent in the current year and 1.5 per cent in 2027. This represents a downgrade from its previous projection in June, which estimated GDP growth at 1.1 per cent this year and 1.6 per cent for 2027.
The revised projections reflect the effects of ongoing trade tensions and heightened uncertainty, with new trade barriers expected to hamper economic momentum.
Higher Budget Deficits and Federal Debt Outlook
The updated report also outlines a worsening budget outlook. The PBO now projects a budgetary deficit of $63.3 billion for the 2026-27 fiscal year, which it expects to rise to $70.2 billion in 2027-28. When compared with its June outlook, annual deficits are now anticipated to be $3 billion higher, on average, over the period spanning 2026-27 to 2030-31. According to the PBO, this increase is due to new government spending measures that have more than offset increases in revenue.
Ongoing Economic Uncertainty
The PBO’s assessment comes as questions persist around Canada’s economic trajectory amid volatile international trade dynamics. With federal debt expected to grow and economic growth projections lowered, the report highlights the long-term fiscal and economic challenges facing the nation as it responds to ongoing trade pressures.
Source: globalnews.ca.
