Economy slows; federal deficit grows, says Parliamentary Budget Officer

February 13, 2020, OTTAWA – The Parliamentary Budget Officer (PBO) today released his latest estimates for near-term growth in the Canadian economy and the Government’s budgetary deficit for 2019-20.

The February 2020 Economic and Fiscal Monitor projects that economic growth will be significantly weaker than expected in the PBO’s November outlook, with real GDP growth in the last quarter of 2019 revised down from 1.6 per cent to 0.3 per cent (at annual rates).

Growth in the Canadian economy slowed sharply in the fourth quarter of 2019 mainly due to temporary disruptions in the mining, oil and gas, motor vehicle and rail transportation sectors,” said Yves Giroux, PBO.

The PBO projects real GDP to grow by 1.5 per cent in the first quarter of 2020, which is also slower than previously projected. The downward revision is due in part to the coronavirus as well as weaker business investment.

For fiscal year 2019-20, the PBO projects that the Government’s budgetary deficit will be $23.5 billion (1.0 per cent of GDP).   The updated deficit estimate is $2.3 billion higher than the PBO’s November projections.

According to Mr. Giroux, “The estimate for the deficit in 2019-20 has been revised up to reflect additional policy measures announced in the Government’s Economic and Fiscal Update, as well as higher current service costs for employee pension and other future benefits.