OTTAWA - Finance Minister Jim Flaherty will grade Canada's economic performance Tuesday - a fall report card that will show tax revenues are down and that erasing the deficit by 2015-16 is not a sure bet.
The annual fall update will give a clearer picture of how the economy has fared since the March budget and the impact events in Europe and the United States are having on the government's bottom line.
Last month the finance department released new figures by several leading private sector economists that showed real GDP growth is expected to slump to 2% next year from 2.4%, but would rebound to 2.5% in 2014 and 2015.
Last week Flaherty said the biggest threat facing the economy is the situation in the United States as legislators try and avoid tumbling off a fiscal cliff - a $600 billion combination of tax hikes and spending cuts set to become law in January.
Leading economists say that if Republicans and Democrats can't reach a compromise, the U.S. economy will fall into recession and Canada will follow.
"What we don't control is the global economic situation," a source close to Flaherty's announcement in Fredericton, N.B., said. "It's having an effect to lower commodity prices in Canada, which in turn has an effect on budgetary revenues.
"Despite that we are on track to balance the budget in the medium term."
Flaherty won't say if the "medium term" means the 2015-16 target the government set to show a small budgetary surplus after years of deficits to combat the 2008-09 financial crisis and its lingering effects. The deficit is forecast to be $21.1 billion at the end of fiscal 2012.
The finance minister has said there are some encouraging signs in the U.S., including an uptick in housing starts, which is good for Canada's lumber industry.