OTTAWA | The Trudeau administration is raising the possibility of a recession early next year for the first time, we learn in its fall economic update released on Thursday.
In its “pessimistic” scenario, Ottawa assumes that Canada will “enter a mild recession in the first quarter of 2023,” according to the almost 100-page document.
“It’s important to be open with Canadians,” Treasury Secretary Chrystia Freeland said at a news conference. The reality is that the global economy is slowing and there is a lot of uncertainty. »
This forecast suggests that the unemployment rate would peak at 6.9% next year and GDP growth would turn negative (-0.9%).
The Bank of Canada has been trying to curb runaway inflation since last March with sharp interest rate hikes, which is having a slowing effect on the economy.
According to its economic scenario, which it considers more likely, Ottawa plans to avoid a recession next year thanks to weak GDP growth of 0.7% in 2023.
More help
Treasury Secretary Chrystia Freeland’s update is banking on additional new support for some Canadians to help them cope with the rising cost of living.
The price for these improvements is $6 billion.
They are mainly aimed at students and professionals.
The federal government is also investing billions, including 600 million this year, in improving customer service. Recent months have revealed deep flaws in the service delivery by the federal civil service, both in the processing of immigration applications and in the processing of passports.
Careful ?
The Liberal government claims it has been careful not to fan the flames of inflation with overspending.
“Government aid has been carefully designed to avoid worsening inflation,” it said.
The fact remains that the Trudeau administration has spent 45% of its additional revenue since its spring budget, thanks to inflation-driven revenues and the strong economic recovery from the pandemic.
Because although the Economic Update provides about $6 billion in new spending this year, Ottawa has expanded more than $7 billion in a variety of measures since last spring.
Minister Freeland believes she has struck the right balance between helping and being cautious.
“We had to strike a balance between fiscal prudence and compassion,” said the finance minister.
Robert Asselin, vice president of public policy at the Business Council of Canada, does not share this reading. In his opinion, the sums would have been better spent on reducing the deficit.
“His narrative about fiscal prudence is a bit of rubbish,” this former economic adviser cuts to Paul Martin and Justin Trudeau.
Money is not often a problem
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Chrystia Freeland during the presentation of her economic update in the House of Commons on Thursday.
WORKERS AND STUDENTS
In response to NDP demands, Liberal government whips out checkbook for low-income workers and students.
- 4 billion dollars over a six-year period to improve the Canada Workers Benefit (CWB), which benefits approximately three million workers. This total allows an employee making $25,000 per year to receive upfront payments of $200 per quarter and $600 at the end of the year.
- $2.7 billion over five years to eliminate interest on Canadian student loans and Canadian apprentice loans. This saves student borrowers an average of $410 per year.
HELLO ? PASSPORT CANADA?
The federal government has been criticized by all quarters for the mediocrity of its service delivery in recent months and will spend $1.6 billion to:
- Accelerate the processing of employment insurance and pension claims and expedite payment approval.
- Reduce wait times at Service Canada and Canada Revenue Agency call centers.
- Offer faster services to veterans.
- Hire additional border guards to ease border pressure.
CAREFUL… AND FREE
Minister Freeland urges caution. However, here are several expenses that have been announced since the spring budget for this year only:
- 400 million dollars to check for COVID-19 at the border
- $258 million to offer refuge to Ukrainians
- $113 million against monkeypox
- $83 million for the wine sector
- 21M$ for CBC Radio Canada
- 11 million dollars for continued excise tax relief for cider and mead
THE AMERICAN WAVE
Washington has invested $369 billion to attract investment that will enable it to make a radical green turn through the Inflation Reduction Act. Ottawa’s response is shy. In the spring, Ottawa announced $15 billion for a new growth fund.
The only new things introduced on Thursday to boost green growth are two corporate tax credits: one for investments in clean technologies, such as renewable power generation systems and zero-emission industrial vehicles, and another for investments in clean hydrogen.
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