BC’s projected deficit has grown to $13.8 billion this year, with the province pointing to higher wildfire costs and tax-credit spending despite stronger-than-expected revenues.
The first quarterly fiscal update, released Monday, projects the deficit will be $450 million higher than forecast in February’s budget.
The government is also lowering its expectations for economic growth. BC’s real GDP is now forecast to grow by 0.9% in 2026, down from the 1.3% previously expected. Growth is forecast to pick up to 1.9% next year.
The province pointed to US tariffs, the conflict in the Middle East, and tighter federal immigration policy as pressures on the economy.
The fiscal update shows BC’s unemployment rate stood at 6.5% in August, while housing starts and home sales have both declined so far this year. Exports, however, have grown, driven by increased trade with countries outside the US.
On the revenue side, the province is forecasting higher-than-expected revenue, driven by stronger income and sales tax revenue. Those gains are being partly offset by weaker revenue from the housing and natural-resource sectors.
One of the biggest changes is natural gas royalties, which are forecast to come in $531 million below budget. The province says about $306 million of that decline is tied to calculation errors in the natural gas price forecast used in Budget 2026. Lower natural gas price expectations also contributed.
Spending is also higher than expected. The province is forecasting an additional $614 million for wildfire management, along with higher costs for refundable tax credits, including the renter’s tax credit and production services tax credit.
Despite the larger deficit, the province expects debt and capital spending to come in below its February projections, largely because of lower borrowing requirements and changes in the timing of infrastructure projects.
The province is still projecting large deficits in the years ahead, with a $12.7-billion shortfall forecast for 2027-28 and $12 billion for 2028-29.
The economic outlook was finalized in early August and does not account for Canadian counter-tariffs or federal supports announced later that month, or subsequent changes to US tariffs.
Finance Minister Josie Osborne said the province is adapting to global economic uncertainty while working to diversify BC’s economy.
“BC is adapting, our exports are growing and we are reaching markets around the world,” Osborne said.
The province expects economic growth to strengthen over the longer term, averaging 2.1% annually between 2028 and 2030.
