By Promit Mukherjee<\/p>\n
OTTAWA, April 28 (Reuters) – Canada’s fiscal update on Tuesday is likely to show the budget deficit improved and revenues rose in the last fiscal year but gains from higher \u200coil prices were largely offset by weak consumer spending and new spending measures, economists said.<\/p>\n
While Canada’s economy \u200chas slowed in the past year since Prime Minister Mark Carney took office, it has withstood the impact of U.S. President Donald Trump’s tariffs \u200bbetter than expected.<\/p>\n
“There will be good news … on the fiscal situation,” Carney said on Monday.<\/p>\n
The government’s performance on hitting deficit targets and getting spending under control will show an improvement, he said.<\/p>\n
Finance Minister Fran\u00e7ois-Philippe Champagne presented Carney’s first federal budget in November, doubling Canada’s deficit projection for the year ending March 2026 with spending initiatives to fight Trump’s tariffs \u200cand boost capital investment.<\/p>\n
“Monthly fiscal numbers look \u2060as if the government is well ahead of its projections,” said Doug Porter, chief economist with BMO Capital Markets.<\/p>\n
Despite trade tensions and uncertainty, the Canadian economy performed slightly better \u2060than expected in 2025, with stronger revenues, lower spending and reduced interest costs easing the debt-servicing burden, he said.<\/p>\n
GDP grew by 1.7% in 2025, surpassing the federal budget projection of just above 1%.<\/p>\n
On the fiscal front, the federal budget estimated \u200bthe 2025\/26 \u200bdeficit at C$78.3 billion, a 116% increase, with the deficit-to-GDP \u200bratio at 2.5%.<\/p>\n
Federal governments typically provide fiscal \u200cupdates in the fall and unveil their budget in April, but Carney changed the timing of the annual federal budget to November to align with the provinces, and pushed the mid-year fiscal update to April.<\/p>\n
Cynthia Leach, assistant chief economist at RBC, said she expects the deficit-to-GDP ratio for the fiscal year 2026 that ended in March to be below 2%.<\/p>\n
FISCAL RISKS<\/p>\n
Still, the uncertainty of the U.S.-Mexico-Canada free trade deal, higher bond yields and strain on consumers \u200cfrom higher oil prices pose risks for the economy, economists \u200bsaid.<\/p>\n
Although Canada is a net oil exporter, the current price spike \u200bis not expected to have a multiplier effect \u200bon investment. It will boost government revenues through higher corporate income tax, but that will \u200cbe largely offset by higher spending.<\/p>\n
Fiscal measures such \u200bas suspending the gasoline tax, \u200bmoney for lower-income groups to counter the high grocery prices and increased defense spending will eat into the benefits from higher oil prices, economists said.<\/p>\n","protected":false},"excerpt":{"rendered":"By Promit Mukherjee OTTAWA, April 28 (Reuters) – Canada’s fiscal update on Tuesday is likely to show the…\n","protected":false},"author":2,"featured_media":22877,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[11393,17,11391,733,11392,162,6145,111],"class_list":["post-22876","post","type-post","status-publish","format-standard","has-post-thumbnail","category-canada","tag-budget-deficit","tag-canada","tag-consumer-spending","tag-defense-spending","tag-deficit-targets","tag-donald-trump","tag-federal-budget","tag-mark-carney"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/22876","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/comments?post=22876"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/22876\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media\/22877"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media?parent=22876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/categories?post=22876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/tags?post=22876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}