Spring economic statement says global uncertainty poses ‘risks’ for Canada

Canada’s spring economic statement paints a grim outlook of the global economy over the coming years with risks that are “significant and skewed to the downside,” while laying out a plan to get more youth in skilled trades and brace the country for continued turbulence on food and energy prices, as well as ongoing tariff uncertainty.

Finance Minister Francois-Philippe Champagne was nevertheless bullish about Canada’s ability to weather the economic storms ahead while tabling the update in the House of Commons on Tuesday.

“Canada is resilient. Canada is resourceful. Canadians are resourceful people,” he said.

“So together we can chart a path forward through the fog of uncertainty. Because Canada has what the world wants and increasingly needs. We have the right plan. We’re building big, we’re moving fast, and the good news, Mr. Speaker, is we’re just getting started.”

The mid-year economic update says the federal government is getting a windfall from better-than-expected fiscal revenues and are largely putting that money back into circulation to support households and build up the economy.

The Liberals now estimate last year’s federal deficit came in at $66.9 billion, more than $11 billion short of the $78.3 billion forecast in the 2025 budget, thanks largely to improved economic performance and some lapses in planned spending.

But the document warns of growing turbulence and uncertainty, echoing similar concerns from the International Monetary Fund and Deloitte Canada in recent weeks about the impact of the conflict in the Middle East that have sent oil prices soaring.

“Risks remain significant and skewed to the downside,” the document says, driven in part by U.S. economic growth becoming “increasingly concentrated in a narrow set of technology-driven sectors” and the possibility of expected productivity gains from recent investments failing to materialize.

“More broadly, persistent disruptions in the Middle East could further elevate energy and commodity prices, add to inflation, weigh on growth, and increase financial market volatility,” it says.

1:50 Carney promises ‘good news’ ahead of spring economic update

The update cites the IMF’s forecast that global GDP growth for this year could be reduced to 2.5 per cent or as low as two per cent — “approaching a global recession” — if higher oil prices persist into 2027 amid tensions between the U.S. and Iran.

“While the impact from higher oil prices on economic activity in Canada is expected to be modest, elevated uncertainty stemming from the conflict, alongside an economy already operating below its productivity capacity, points to risks that are tilted to the downside,” it says.

However, the Liberals predict that inflation will return to the two per cent target range by the end of the year if the oil price spike is “temporary.”

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They add that cost pressures brought by U.S. tariffs “appear contained,” while other underlying inflation dynamics have continued to improve.

“By contrast, a prolonged disruption of shipping through the Strait of Hormuz would extend cost pressures,” the update says.

“Elevated crude oil prices would persist for longer, increasing the likelihood of spillovers to other prices, especially for energy intensive goods and services. Pressures on global food prices would also intensify, reflecting higher fertilizer costs and given that natural gas from the Middle East is a key source of nitrogen-based fertilizers globally.”

Conservative Leader Pierre Poilievre accused the Liberals of standing in the way of resource production and growing the deficit while raising spending.

“Today’s liberal fiscal updates brings more costs, more debt and more bills on the national credit card,” he said in the House.

7:12 Liberals to table spring fiscal update on Tuesday

The government says that while Canada’s labour market has “proven resilient” despite softening last year from the U.S. tariff shock, Canadian youth and new immigrants are facing “a headwind” of particularly soft demand for for entry-level jobs.

Youth unemployment “remains elevated” and has only slightly declined from its recent peak of 14.6 per cent in September 2025 to 13.8 per cent in March, the update said.

To help address that, the update includes a new “Team Canada Strong” program that seeks to recruit, train and hire 80,000 to 100,000 new Red Seal skilled trades workers by the 2030-31 fiscal year to support the government’s investments in homebuilding, infrastructure and defence manufacturing.

The five-step plan gives youth aged 15 to 30 who sign up for the program a four-month entry job placement to gain experience that leads to apprenticeships, followed quickly by on-the-job and technical training with wage incentives that lead to certification.

The government says the plan will reduce the time it takes to become a certified trades worker by 50 per cent.

The economic update proposes providing up to $331 million over five years starting this fiscal year, and $18 million ongoing to “boost and modernize apprenticeship training.”

It also sets aside $3.4 billion over five years and $468 million ongoing “to address the challenges that can stop apprentices from completing their training and moving into permanent jobs” by giving those workers a $400 weekly income top-up for up to $16,000 total per apprentice.

Canadian Armed Forces members will also get new pathways to skilled trades jobs, with $250 million over five years proposed to provide training capacity for members, as well as exposure to trades for young cadets and Junior Canadian Rangers.

1:48 Feds announce $250 million to expand training capacity for skilled trades within the CAF

The spring statement says that employment has levelled off and population growth is putting less pressure on the job market.

The Liberals say that, while job growth should resume in 2026, “gains will likely be modest” and demand for workers will improve “gradually.”

“Combined with slower growth in the working-age population, this is expected to support a gradual easing in the unemployment rate in the second half of the year.”

However, the overall economic picture is still far from rosy, particularly if global headwinds persist.

“The economy is expected to continue growing, but the outlook is subject to heightened global uncertainty, including ongoing trade tensions and geopolitical risks,” the document said.

“To support long‑term affordability and job opportunities, the government is focused on creating the conditions that allow businesses to invest, grow, and sustain employment—by fostering a stable, competitive, and resilient economic environment as Canada adapts to a more uncertain global landscape.”

The outlook lays out two likely scenarios that Canadians may face, neither of them particularly optimistic and framed around a baseline of significant ongoing undertainty.

In the “higher investment scenario,” a prolonged disruption to global oil supplies pushes prices to peak around US$115 per barrel by the second quarter of 2026 — a level similar to what was seen early this month at the height of the Iran war.

“However, Canada, as a net exporter of oil, benefits from improved terms of trade, driving up national income,” the scenario says. “The country is also seen as a reliable source of energy products as geopolitical risks and uncertainty in the Middle East persist, supporting demand for Canadian crude oil.”

Canada’s GDP growth under this scenario, which predicts new private investment in the oil and gas sector and other industries, would be “modestly higher” than the March economist survey by Statistics Canada.

By contrast, the “global supply disruptions scenario” would see export constraints from the Strait of Hormuz blockade and damage to critical energy infrastructure in the Middle East upend supply chains, driving up shipping costs and global inflation.

“The Canadian economy is not spared, compounded by ongoing adjustments to tariffs, as real GDP is affected through reduced consumption, investment, exports, and productivity,” the document says.

“Structural uncertainty about future energy demand also results in a muted investment response by Canadian energy producers, despite higher oil prices.”

This scenario would see GDP growth fall below the Statistics Canada forecast by 1.3 per cent “at peak impact in 2028” and fall below baseline by an average of $9 billion per year from 2028 to 2030.