Office of the Parliamentary Budget Officer
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Economic and Fiscal Outlook – October 2024

Régine Cléophat ; Mark Creighton ; Matt Dong ; Eskandar Elmarzougui ; Albert Kho ; Marianne Laurin ; Matthew McGoey ; Katarina Michalyshyn ; Nora Nahornick ; Caroline Nicol ; Ulysse Robert-Lacroix ; Jason Stanton ; Zachary Vrhovsek ; Chris Matier
Published on October 17, 2024 PDF(opens a new window)

This report provides a baseline projection to help parliamentarians gauge potential economic and fiscal outcomes under current policy settings.

PDF

Communications

Quotes

  • As the impact of Government spending tapers off and elevated interest rates continue to put pressure on consumer spending and business investments, we expect economic activity to slow over the remainder of the year. Real GDP growth will rebound to 2.2 per cent in 2025, as the Bank of Canada continues to lower borrowing costs, boosting spending and investment, and exports pickup.

  • Based on our analysis, the Government will not meet its fiscal commitment to keep the deficit below $40 billion in 2023-24.

  • Excluding any potential new measures or announcements, the deficit is projected to marginally decline to $46.4 billion in 2024-25 while the federal debt-to-GDP ratio remains at 42.2%. Under status quo policy, the deficit is projected to decline over the medium term, falling to $23.8 billion (0.7% of GDP) in 2028-29.

  • In terms of downside risks, we continue to judge that the most important risk is a larger-than-expected impact on the Canadian economy, including housing, from the Bank of Canada’s restrictive monetary policy, which would negatively affect the Canadian economy and federal finances.

Yves Giroux
Parliamentary Budget Officer

News Release

{"id":69,"created_at":"2024-10-17T07:47:17-04:00","updated_at":"2024-10-17T08:57:02-04:00","slug":"moderate-economic-growth-ahead-as-government-unlikely-to-meet-budget-target-says-pbo-croissance-economique-moderee-a-prevoir-dans-un-contexte-ou-le-gouvernement-est-peu-susceptible-datteindre-ses-objectifs-budgetaires-selon-le-dpb","title_en":"Moderate economic growth ahead as Government unlikely to meet budget target, says PBO","title_fr":"Croissance \u00e9conomique mod\u00e9r\u00e9e \u00e0 pr\u00e9voir dans un contexte o\u00f9 le gouvernement est peu susceptible d\u2019atteindre ses objectifs budg\u00e9taires, selon le DPB","body_en":"The Parliamentary Budget Officer (PBO) today released his Economic and Fiscal Outlook (EFO). The report provides a baseline projection to help parliamentarians gauge potential economic and fiscal outcomes under current policy settings.\n\nPBO projects growth in the Canadian economy to remain tepid through 2024, with real GDP growth advancing by 1.1 per cent, and the unemployment rate hovering just below 7 per cent for the rest of this year.\n\n\u201cAs the impact of Government spending tapers off and elevated interest rates continue to put pressure on consumer spending and business investments, we expect economic activity to slow over the remainder of the year\u201d, says Yves Giroux, PBO. \u201cReal GDP growth will rebound to 2.2 per cent in 2025, as the Bank of Canada continues to lower borrowing costs, boosting spending and investment, and exports pickup\u201d.\n\nOver 2027 to 2029, PBO projects real GDP growth to average 1.9 per cent which is slightly higher than our estimated growth in potential output (1.8 per cent) over the same period.\n\nThe PBO outlook includes measures announced by the Government in Budget 2024 and through August 31, 2024. For the previous fiscal year, 2023-24, we estimate the budgetary deficit to be $46.8 billion (1.6% of GDP) and the federal debt-to-GDP ratio to rise to 42.2%. \n\n\u201cBased on our analysis, the Government will not meet its fiscal commitment to keep the deficit below $40 billion in 2023-24\u201d, says Mr. Giroux.\n\n\u201cExcluding any potential new measures or announcements, the deficit is projected to marginally decline to $46.4 billion in 2024-25 while the federal debt-to-GDP ratio remains at 42.2%. Under status quo policy, the deficit is projected to decline over the medium term, falling to $23.8 billion (0.7% of GDP) in 2028-29,\u201d adds Mr. Giroux.\n\nCompared to PBO\u2019s March outlook, projected budgetary deficits are roughly $4.1 billion higher, on average, over the next five years. This deterioration is due to new spending measures.\n\nThe PBO report highlights risks and uncertainty surrounding the outlook. Setting aside new measures that are likely to be announced between now and the next federal election, the risks to the PBO baseline economic and fiscal projection are roughly balanced.\n\n\u201cIn terms of downside risks, we continue to judge that the most important risk is a larger-than-expected impact on the Canadian economy, including housing, from the Bank of Canada\u2019s restrictive monetary policy, which would negatively affect the Canadian economy and federal finances,\u201d highlights Mr. Giroux. \u201cStronger-than-expected household spending is the most important upside risk\u201d.","body_fr":"Le directeur parlementaire du budget (DPB) a publi\u00e9 aujourd\u2019hui ses Perspectives \u00e9conomiques et financi\u00e8res (PEF). Ce rapport fournit des pr\u00e9visions de r\u00e9f\u00e9rence aux parlementaires pour les aider \u00e0 \u00e9valuer les r\u00e9sultats \u00e9conomiques et financiers des politiques actuelles.\n\nLe DPB pr\u00e9voit que la croissance de l\u2019\u00e9conomie canadienne restera timide jusqu\u2019\u00e0 la fin de 2024; en effet, le PIB r\u00e9el progressera de 1,1 %, et le taux de ch\u00f4mage sera l\u00e9g\u00e8rement inf\u00e9rieur \u00e0 7 % jusqu\u2019\u00e0 la fin de l\u2019ann\u00e9e.\n\n\u00ab Dans un contexte o\u00f9 l\u2019incidence des d\u00e9penses publiques s\u2019att\u00e9nue et que les taux d\u2019int\u00e9r\u00eat \u00e9lev\u00e9s continuent d\u2019exercer une pression sur les d\u00e9penses des consommateurs et sur les investissements des entreprises, nous pr\u00e9voyons un ralentissement de l\u2019activit\u00e9 \u00e9conomique pour le reste de l\u2019ann\u00e9e, a d\u00e9clar\u00e9 le DPB, Yves Giroux. La croissance du PIB r\u00e9el remontera \u00e0 2,2 % en 2025, et la Banque du Canada continuera de r\u00e9duire les co\u00fbts d\u2019emprunt, ce qui stimulera les d\u00e9penses et les investissements et entra\u00eenera un redressement des exportations \u00bb.\n\nDe 2027 \u00e0 2029, le DPB pr\u00e9voit que la croissance du PIB r\u00e9el sera en moyenne de 1,9 % par ann\u00e9e, ce qui est l\u00e9g\u00e8rement sup\u00e9rieur \u00e0 notre estimation de la croissance de la production potentielle (1,8 %) pour la m\u00eame p\u00e9riode.\n\nLes perspectives du DPB tiennent compte des mesures annonc\u00e9es par le gouvernement dans le budget de 2024ainsi que celles annonc\u00e9es jusqu\u2019au 31 ao\u00fbt 2024. Pour l\u2019exercice pr\u00e9c\u00e9dent, soit 2023 2024, nous estimons que le d\u00e9ficit budg\u00e9taire a atteint 46,8 milliards de dollars (1,6 % du PIB) et que le ratio dette f\u00e9d\u00e9rale-PIB s\u2019est \u00e9lev\u00e9 \u00e0 42,2 %. \n\n\u00ab D\u2019apr\u00e8s notre analyse, le gouvernement ne respectera pas son engagement budg\u00e9taire de maintenir le d\u00e9ficit sous la barre des 40 milliards de dollars en 2023 2024 \u00bb, a indiqu\u00e9 M. Giroux.\n\n\u00ab Exception faite de toute nouvelle mesure ou annonce \u00e9ventuelle, le d\u00e9ficit devrait diminuer de fa\u00e7on marginale pour atteindre 46,4 milliards de dollars en 2024 2025, tandis que le ratio de la dette f\u00e9d\u00e9rale au PIB restera \u00e0 42,2 %. Si les politiques actuelles sont maintenues, le d\u00e9ficit devrait diminuer \u00e0 moyen terme pour atteindre 23,8 milliards de dollars (0,7 % du PIB) en 2028 2029 \u00bb, a ajout\u00e9 le DPB.\n\nPar rapport aux perspectives de mars du DPB, les d\u00e9ficits budg\u00e9taires pr\u00e9vus seront sup\u00e9rieurs en moyenne de 4,1 milliards de dollars au cours des cinq prochains exercices. Cette d\u00e9t\u00e9rioration est attribuable \u00e0 de nouvelles d\u00e9penses.\n\nDans son rapport, le DPB mentionne les risques et les incertitudes li\u00e9s \u00e0 ses perspectives. Si on fait abstraction des nouvelles mesures qui seront vraisemblablement annonc\u00e9es d\u2019ici les prochaines \u00e9lections f\u00e9d\u00e9rales, les risques qui p\u00e8sent sur ses pr\u00e9visions \u00e9conomiques et financi\u00e8res de r\u00e9f\u00e9rence sont \u00e0 peu pr\u00e8s \u00e9quilibr\u00e9s.\n\n\u00ab Nous estimons toujours que le plus important risque \u00e0 la baisse serait que la politique mon\u00e9taire restrictive de la Banque du Canada ait des incidences plus grandes que pr\u00e9vu sur l\u2019\u00e9conomie canadienne, notamment le logement, ce qui nuirait \u00e0 celle-ci ainsi qu\u2019aux finances f\u00e9d\u00e9rales, a soulign\u00e9 M. Giroux. Des d\u00e9penses des m\u00e9nages plus \u00e9lev\u00e9es que pr\u00e9vu constituent le principal risque \u00e0 la hausse. \u00bb","release_date":"2024-10-17T09:00:00-04:00","is_published":"2024-10-17T08:57:02-04:00","internal_id":"COM-2425-069","permalinks":{"en":{"website":"https:\/\/www.pbo-dpb.ca\/en\/blog\/news-releases--communiques-de-presse\/moderate-economic-growth-ahead-as-government-unlikely-to-meet-budget-target-says-pbo-croissance-economique-moderee-a-prevoir-dans-un-contexte-ou-le-gouvernement-est-peu-susceptible-datteindre-ses-objectifs-budgetaires-selon-le-dpb"},"fr":{"website":"https:\/\/www.pbo-dpb.ca\/fr\/blog\/news-releases--communiques-de-presse\/moderate-economic-growth-ahead-as-government-unlikely-to-meet-budget-target-says-pbo-croissance-economique-moderee-a-prevoir-dans-un-contexte-ou-le-gouvernement-est-peu-susceptible-datteindre-ses-objectifs-budgetaires-selon-le-dpb"}},"pivot":{"publication_id":824,"news_release_id":69}}