2023-10-14 01:00:28
A sign of the deterioration of the economy, the Parliamentary Budget Officer (PBO) now expects the federal deficit to reach $46.5 billion in 2023-2024, an amount 16% higher than initially forecast by the Trudeau government.
Last March, Finance Minister Chrystia Freeland presented a budget in red ink forecasting a $40.1 billion deficit for the current year.
However, due to the economic slowdown and high interest rates, Canada will sink even deeper into debt, assessed the PBO.
According to its analysis published Friday, the Canadian debt will instead climb to $46.5 billion this year, or 1.6% of Canada’s GDP.
The economic outlook is not encouraging according to the PBO, which does not expect a reduction in the Bank of Canada’s key rate before April 2024.
“Following the decline in real GDP during the second quarter, the Canadian economy is expected to stagnate during the second half of the year and growth is expected to remain weak during the first half of 2024. The unemployment rate is expected to reach 6%. the middle of next year and remain high throughout the first half of 2025,” envisages the parliamentary budget officer, Yves Giroux.
In doing so, the total federal debt is expected to be equivalent to 42.6% of Canada’s GDP at the end of the 2023-2024 fiscal year. This is a considerable increase of 11.4% since the last pre-pandemic budget year, 2019-2022.
“Under a status quo policy, the deficit should decrease in the medium term, reaching $8.2 billion in 2028-29,” assessed Mr. Giroux.
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