PBO trims growth forecast as tariffs weigh on economy
The Parliamentary Budget Office has trimmed its forecast for Canadian economic growth, citing new United States tariffs and Canadian countermeasures.
The office, which provides independent economic analysis to Parliament, now expects real gross domestic product to grow by 0.9 per cent in 2026 and by 1.5 per cent in 2027, The Globe and Mail reported.
That is a step down from its June outlook, when it estimated growth of 1.1 per cent for 2026 and 1.6 per cent for 2027. The change follows the breakdown of trade talks between Canada and the United States at the end of August, and a subsequent round of American tariffs and Canadian countertariffs.
The budget office also projects a larger shortfall in Ottawa's finances. It expects a federal budgetary deficit of $63.3 billion in the 2026-27 fiscal year, peaking at $70.2 billion in 2027-28. Compared with June, deficits are $3 billion higher per year on average from 2026-27 to 2030-31, as new spending measures more than offset stronger revenues.
The weaker outlook follows a flat summer. The economy was unchanged in July and was likely to expand by 0.2 per cent in August, Reuters reported.
In September, the Bank of Canada said new American tariffs could reduce fourth-quarter growth to below 1 per cent, Reuters reported. The central bank has said the economy is expected to grow at a moderate pace as it continues to adjust to U.S. tariffs, Bank of Canada.
In its June outlook, the budget office estimated that trade policies and uncertainty would reduce the level of gross domestic product by 0.9 per cent by 2030, Parliamentary Budget Office.
