Parliamentary Budget Officer downgrades economic and fiscal outlook

The Parliamentary Budget Officer (PBO) today released his latest Economic and Fiscal Outlook.

“We have downgraded our outlook for growth in the Canadian economy and we are projecting larger budgetary deficits compared to our June 2019 baseline,” says PBO Yves Giroux.

The November 2019 outlook projects real gross domestic product (GDP) growth will be 1.7% in 2020 and 1.6% in 2021. This is 0.3 and 0.2 percentage points lower, respectively, than the June 2019 Election Proposal Costing (EPC) baseline. The downward revision stems mostly from weaker export performance and reduced contributions from inventory investment.

According to the PBO, budgetary deficits will also be $1.6 billion larger per year, on average, than projected in the EPC baseline due to lower tax revenues and higher operating expenses, before implementing any of the electoral commitments. That said, the PBO continues to project the federal debt-to-GDP ratio to decline over the medium term.

The PBO is providing this economic and fiscal outlook as an updated independent status quo planning assumption for the start of the 43rd Parliament. This outlook does not include commitments made by any party during the 2019 general election campaign.  It is expected that budgetary deficits will be higher than our status quo projection once these commitments start being implemented.

In addition, the Government has not yet set its fiscal targets for the 43rd Parliament. “In the past, the Government has set fiscal anchors for balancing the budget and for the federal debt-to-GDP ratio,” said Mr. Giroux. “We anticipate that the government will commit to a fiscal anchor and we will monitor progress towards achieving it once it has been announced.”

The report is available here: Economic and Fiscal Outlook – November 2019.