Parliamentary Budget Watchdog Lowers Canada's GDP Forecasts as Tariff Impact Deepens, Sees Higher Federal Debt

10:53 AM EDT, 10/20/2026 (MT Newswires) -- Canada's Parliamentary Budget Officer (PBO) Tuesday lowered its growth outlook as intensifying trade tensions with the US weigh on the economy, while forecasting a rise in federal debt. Real gross domestic product growth is estimated to slow to 0.9% this year and 1.5% in 2027, down from previous estimates of 1.1% and 1.6%, respectively, said the PBO in a note. The parliamentary regulator's previous projections were set in June. The PBO now expects US tariffs and Canada's retaliatory measures to reduce real GDP by around 1.4% over the medium term if they remain in place, compared with its previous estimate of 0.9%. The federal debt-to-GDP ratio is projected to increase from 40.8% in 2026-27 to 42.6% by 2030-31, it added, as the government needs to finance loans, capital investments, defense procurement and other financial assets. The federal debt is predicted to rise to CA$1.67 trillion in 2030-31 from CA$1.33 trillion in 2025-26.