Weighing the Choices: The Implications of Canada's Election in a Highly Uncertain Environment

Canadians are heading to the polls on April 28, 2025, amid a political environment that has shifted dramatically following the resignation of former Prime Minister Justin Trudeau and the inauguration of U.S. President Donald Trump.

Key Highlights:
-- The incumbent Liberals are currently leading the opposition Conservatives in the polls--a dramatic reversal from just a few months ago.
-- Both Conservatives and Liberals have announced various campaign commitments that are likely to boost the deficit and increase borrowing.
-- Canada enters this period of turmoil from a position of strength, with modest deficits, which allow it ample flexibility to respond to shocks.

"We maintain the view that Canada's credit profile remains very strong despite the changing domestic political landscape and macroeconomic challenges, including the ongoing impact of U.S. tariffs," says Travis Shaw, Senior Vice President, Sector Lead, Global Sovereign Ratings. "Canada's deficit compares favourably with other G7 countries, leaving it flexibility to respond to current shocks; however, we won't know the full impact of the fiscal response until the results of the election are known and the incoming government formalizes its fiscal plan."