Canada trims 2026 growth to 1.1%

Canada’s federal government cut its 2026 growth forecast to 1.1% on April 28 and said the economy will stay smaller for years because of tariffs. (budget.canada.ca) (investinglive.com) Finance Minister François-Philippe Champagne tabled the Spring Economic Update in Ottawa, lowering the 2027 growth forecast to 1.9% from 2.0% and leaving 2028 at 1.9%. (rbcwealthmanagement.com) (investinglive.com) The fiscal picture improved at the same time. Ottawa now estimates the 2025-26 deficit at C$66.9 billion, C$11.5 billion lower than Budget 2025, or 2.1% of gross domestic product. (budget.canada.ca) (ipolitics.ca) The government said the better deficit came from a more resilient economy, lower spending and stronger revenues, including support from higher crude oil prices. The debt-to-GDP ratio for 2025-26 was revised to 41.1% from 42.4% in the prior forecast. (budget.canada.ca) (investinglive.com) The weaker outlook is tied to trade. Private-sector economists surveyed by Finance Canada assumed current U.S. tariffs on trading partners, including Canada, remain in place through the forecast horizon. (budget.canada.ca) Finance Canada said real GDP is not expected to return to its pre-tariff track and will still be about 1.6% below the level projected in the autumn 2024 outlook by 2029. (investinglive.com) Ottawa paired the downgrade with new industrial policy. The update launches the Canada Strong Fund, described as Canada’s first sovereign wealth fund, with C$25 billion in near-term capitalization. (budget.canada.ca) (rbcwealthmanagement.com) The update also launches Team Canada Strong to recruit, train and hire 80,000 to 100,000 Red Seal skilled trades workers by 2030-31, including C$331 million over five years to speed apprenticeship training. (budget.canada.ca 1) (budget.canada.ca 2) For households, RBC Wealth Management said the package included no personal or corporate income tax rate changes, but it did flag planning measures such as making the Employee Ownership Trust exemption permanent and cutting the base Canada Pension Plan contribution rate to 9.5% starting January 1, 2027. (rbcwealthmanagement.com) Champagne said the update showed “responsible fiscal management” after a year of trade-war pressure and global uncertainty. The government’s numbers now show a smaller deficit, but also an economy growing more slowly into 2027. (ipolitics.ca)