Ottawa | The Trudeau government is raising the possibility of a recession early next year for the first time, in its fall economic update released Thursday.
In its “pessimistic” scenario, Ottawa projects that Canada will enter a “mild recession in the first quarter of 2023,” according to the less than 100-page document.
“It’s important to be transparent with Canadians,” Finance Minister Chrystia Freeland told a news conference. The reality is that the global economy is slowing and there is a lot of uncertainty. »
This forecast indicates that the unemployment rate will peak at 6.9% and GDP growth will decline negatively (-0.9%) next year.
The Bank of Canada has been trying to control inflation with drastic interest rate hikes since last March, which has had the effect of slowing the economy.
Given its economic situation, it considers it more likely that Ottawa still plans to avoid a recession next year, thanks to lower GDP growth of 0.7% in 2023.
More help
Finance Minister Chrystia Freeland’s update provides some additional new support for some Canadians to deal with the rising cost of living.
The cost of these improvements is $6 billion.
They are mainly aimed at students and workers.
The federal government is also spending billions, including $600 million this year, to improve its customer service. In recent months there have been profound deficiencies in the delivery of services by the federal public service, both in the processing of immigration applications and passports.
Attention?
The Liberal government says it was careful not to add fuel to the fire of inflation with excessive spending.
“Government assistance is carefully designed to avoid hyperinflation,” it says.
The Trudeau government has spent 45% of the extra revenue from its spring budget, thanks to inflation-linked earnings and a strong post-pandemic economic recovery.
While economic development will provide $6 billion in new spending this year, Ottawa has extended more than $7 billion in activities since last spring.
Minister Freeland believes he has struck the right balance between help and caution.
“A balance needs to be struck between fiscal prudence and compassion,” the finance minister said.
Robert Asselin, vice-president of public policy at the Business Council of Canada, doesn’t share this reading. According to him, the funds would have been better spent on reducing the deficit.
This former economic adviser to Paul Martin and Justin Trudeau says, “His narrative of budgetary prudence is a little rubbish.”
Money is often not the problem
Photo by Reuters
Chrystia Freeland delivers her economic update in the House of Commons on Thursday.
workers and students
In response to NDP demands, the Liberal government is pulling the checkbook for low-income workers and students.
- $4 billion Over six years to improve Canada Workforce Benefits (CWB) benefiting approximately three million workers. This amount would allow an employee earning $25,000 a year to receive $200 in advance each quarter and $600 at the end of the year.
- $2.7 billion Over five years to eliminate interest on Canada Student Loans and Canada Training Loans. This will save student loan borrowers an average of $410 per year.
Hello? Passport Canada?
Criticized from all quarters in recent months for the mediocrity of its service delivery, the federal government will spend $1.6 billion on:
- Expediting the processing and payment of Employment Insurance and Old Age Security applications.
- Reduce wait times at Service Canada and Canada Revenue Agency call centres.
- Provide expeditious services to veterans.
- Deploy additional Border Service officers to reduce border pressure.
Be careful… and spend
Minister Freeland urges caution. However, here are some of the expenses announced from this year’s spring budget:
- $400 million To test for Covid-19 at the border
- $258M To give refuge to Ukrainians
- $113M To fight the monkey disease
- $83M For the wine sector
- 21 m$ For CBC-Radio-Canada
- $11M For continued excise duty relief on cider and mead
American Wave
Washington has invested US$369 billion to attract investments that will allow for a radical green transition through deflationary legislation. Ottawa’s response is alarming. In the spring, Ottawa announced $15 billion in new development funding.
The only new things introduced Thursday to boost green growth are two tax incentives for businesses: one for investing in clean technologies like renewable electricity generation systems and zero-emission industrial vehicles, and another for investing in clean hydrogen.
