The Trudeau government is now forecasting larger-than-expected deficits for the next two years even before adding billions in promised spending in its first budget, which will be tabled on March 22.
Finance Minister Bill Morneau presented the updated numbers at a pre-budget town hall in Ottawa on Monday, then took questions from the audience as well as reporters.
Morneau said the government will post a smaller than projected deficit of $2.3 billion for 2015-16, down from the $3-billion deficit projected in November's fall fiscal update.
But that deficit will balloon to $18.4 billion in 2016-17 and $15.5 billion in 2017-18 — and that is before any new spending Morneau outlines next month. Those numbers are way up from the $3.9-billion and $2.4-billion shortfalls forecast just three months ago
The revised two-year economic and fiscal outlook takes into account sharp declines in crude oil prices since the fall update and continued uncertainty in the global economy.
Morneau said private sector economists now expect crude oil prices (for West Texas Intermediate) to average $40 U.S. per barrel in 2016, down from $54 U.S. per barrel expected in the fall update. He said the current price stands at $31.50 per barrel.
Economists have also revised real gross domestic product growth for Canada to 1.4% in 2016, down from 2% growth forecast in the fall update. The GDP growth for 2017 remains unchanged at 2.2%.
