Provincial Outlook and Fiscal Analysis

Canadian growth is tracking closer to the least negative scenarios from earlier in the year.

Fiscal policy will remain a wildcard in the outlook and its impact on growth depends on what types of initiatives move forward.

Amid a sizeable trade shock and lingering uncertainty, the economy’s growth outlook is running far softer than most forecasters predicted.

The deficit is expected to deepen to $14.6 billion in 2025-26—marking a $10 billion deterioration from the deficit anticipated in Budget 2024.

It’s too early to fully assess how a new government will impact Canada’s economy over time, but here are key areas worth highlighting.

P.E.I. projects the largest deficit in province’s history at $184 million in 2025-26 with no plans to return to balance.

Newfoundland and Labrador projects a $372 million shortfall in 2025-26, delaying plans to balance by a year.

Québec’s 2025 Budget focuses on stimulating wealth creation and fostering innovation—top priorities for both the short and longer terms that have been heightened by the current trade turbulence.

Manitoba’s Budget 2025 added more commitments to the ambitious fiscal plan rolled out last year.

Saskatchewan’s 2025 Budget forecasts a modest $12 million surplus, reflecting solid revenue growth and a slight dip in expenditures due to the roll off of one-time expenses.

New Brunswick projects a $599 million deficit in 2025-26 following a $399 million shortfall in 2024-25, marking a shift from the recent streak of surpluses.

The threat of significant international trade disruptions is overshadowing what would have been a substantially improving Canadian economy.