B.C. projects larger deficits over next three years as growth forecast falls

British Columbia is facing larger budget deficits over the next three years, with the government projecting a shortfall of $13.8 billion in 2026-27.

The revised figures, released in the First Quarterly Report on Monday, reflect a sharper slowdown than anticipated. Real GDP growth for 2026 is now forecast at 0.9 per cent, down from the 1.3 per cent projected in Budget 2026. The government cited "significant headwinds" from U.S. tariffs, disruptions to global supply chains from the Middle East conflict, and tighter federal immigration policy as drivers of the downward revision.

Deficits are expected to remain elevated: $12.7 billion projected for 2027-28 and $12 billion for 2028-29.

Labour and housing market weakness is expected to weigh on consumer spending and residential investment. Retail sales saw little growth in early 2026 despite wage and salary gains. Merchandise exports increased slightly despite U.S. tariffs, with rising LNG production and higher commodity prices supporting exports to non-U.S. destinations, but exports to the U.S. are down due to lower softwood lumber shipments.

The government said "B.C.'s economic performance has been mixed in the first seven months of 2026."