Canada's Parliamentary Budget Watchdog Trims Its 2026, 2027 GDP Growth Estimates and

09:49 AM EDT, 06/04/2026 (MT Newswires) -- Treating the current tariff environment as permanent, the Canadian Parliamentary Budget Officer (PBO) now projects real gross domestic product growth of 1.1% for this year and 1.6% in 2027, down from 1.3% and 1.8%, respectively, from its September 2025 outlook.

The PBO noted its Economic and Fiscal Outlook for June 2026 assessed that the Canadian economy grew by 1.7% in 2025, "with a weakened outlook thereafter".

After accounting for historical revisions, nominal GDP, the broadest measure of the government's tax base, is projected to be, on average, $19.5 billion higher annually over the 2026 to 2030 period compared with the outlook from September, due to stronger energy prices, said the PBO. PBO's status quo fiscal outlook includes the incremental measures announced in Budget 2025 and the Spring Economic Update 2026. Combined, these measures amount to $68.4 billion in (net) new spending over 2025-26 to 2030-31.

PBO projects Canada's budgetary deficit to increase from $36.3 billion, or 1.2% of GDP, in 2024-25 to $72.0 billion, 2.2% of GDP, in 2025-26 as modest revenue growth is outpaced by growth in expenses -- largely reflecting the introduction of new measures.

PBO projects budgetary deficits averaging $4.6 billion per year above the SEU 2026, reflecting lower revenues, particularly personal income tax, and higher program expenses, partially offset by lower public debt charges. It noted recent trends point to atypical growth paths for elderly benefits and children's benefits. PBO will pursue further analysis regarding both expense categories.

Assuming no new measures are introduced and existing temporary measures sunset as scheduled, the budgetary deficit is projected to decline to $58.2 billion by 2030-31, as revenue growth outpaces growth in program expenses, partially offset by rising public debt charges, said PBO.

Due to persistent budgetary deficits of on average 1.8% of GDP over the projection horizon, the federal debt-to-GDP ratio is seen rising from 41.3% in 2025 26 to 42.5% in 2030 31. Similar to PBO's September outlook, the federal debt-to-GDP ratio is projected to remain flat over the medium term, it added.

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