Report

Economic and Fiscal Monitor – June 2025

Jun 19, 2025

This report provides a real-time estimate of growth in Canada’s gross domestic product (GDP) and the Government of Canada’s budgetary balance in 2024-25 based on data released since our March 2025 Economic and Fiscal Outlook, up to and including 13 June 2025. All rates are reported at annual rates unless otherwise noted.

Highlights

Canada’s real GDP grew by a stronger-than-expected 2.2 per cent in the first quarter of 2025, as firms increased exports and inventories in anticipation of new U.S. tariffs.
We expect that Canada’s real GDP will be flat in the second quarter of 2025. Recent data suggest that the Canadian economy slowed in the second quarter due to the unwinding of pre-tariff stockpiling and the adverse impact of new U.S. tariffs on exports.
The Government’s budgetary balance for 2024–25 is estimated to be a deficit of $46.0 billion (1.5 per cent of GDP). This is $4.3 billion lower than our projection in the 2025 Election Proposal Costing baseline, which did not include the impact of tariffs or retaliatory measures. The debt-to-GDP ratio is estimated to fall to 41.5 per cent of GDP in 2024-25, from 42.1 per cent in 2023-24.
The Government has introduced a new Operating Budget fiscal anchor and committed to balancing this “budget” by 2028-29. It is currently unclear what would be defined as “operating” or “non-operating/capital” spending. Hence PBO is unable to assess whether the Government’s recent fiscal policy initiatives are consistent with achieving its fiscal objective.