Ontario projects $16.9-billion deficit for 2026-27 as tariffs and oil prices weigh on growth
Ontario now projects a $16.9-billion deficit for the 2026-27 fiscal year, up from the $13.8 billion it forecast in its March budget. Finance Minister Peter Bethlenfalvy released the province's fall economic statement, a mid-year update on government revenue and spending, on Oct. 29. The Globe and Mail reported the figures.
A deficit means the government plans to spend more than it collects in revenue. The province attributes its weaker outlook to U.S. tariffs and higher oil prices. It cut its forecast for 2026 real GDP growth to 0.5 per cent, down from 1 per cent in March. Real GDP is the total value of goods and services produced, adjusted to remove the effect of inflation.
The shortfalls are also larger in later years. Ontario projects a $12.7-billion deficit for next year, more than double its March budget prediction. It now forecasts a $6.7-billion deficit for 2028-29, where March had projected a $600-million surplus. The province now targets a balanced budget in 2029-30.
Trade pressure is showing up in specific industries. Ontario steel exports to the United States are down more than 50 per cent so far this year compared with the same period in 2024. Auto exports are down almost 14 per cent since 2024.
The province also added $3.8 billion to its contingency fund, a reserve for unexpected costs. That brings the fund to $4.9 billion. The projected 2026-27 deficit is larger in nominal terms, meaning dollar amounts that are not adjusted for inflation, than the $16.4-billion deficit Ontario recorded in 2020-21.
