Pandemic Leaves Its Mark: Canada’s Fiscal Policy Outlook to 2045

This annual economic forecast presents Canada’s long-term fiscal policy outlook.

Document Highlights

The COVID-19 pandemic has reset fiscal policy in Canada, pushing the federal and collective provincial governments into historic deficits that will linger throughout much of the long term.

The deficits were necessary, as governments acted as a critical safety net for the economy by doling out essential support for individuals and businesses alike.

With most of the income support ending, governments will soon shift to cost restraint to avoid adding further to their record debt levels.

Prior to the outbreak, governments were already facing an uphill fiscal battle due to Canada’s aging demographics. The inevitable senior population tsunami will simultaneously weigh on revenue growth and elevate demand for health care services.

We expect the federal and collective provincial governments to remain in deficit over the next two decades, before reaching a surplus in the early 2040s.