Canada to Present Fall Economic Update on Nov. 30 -- Update
By Paul Vieira
OTTAWA--Canada will present an economic update next Monday,
which Finance Minister Chrystia Freeland said would begin the task
of rolling out how the Liberal government plans to rebuild the
economy in a post-pandemic world.
She will also unveil revised numbers outlining the budget
deficit and debt for the current fiscal year -- both of which will
set records based on Canada's aggressive response to minimize
economic damage from the coronavirus. Immediate economic fortunes
appear grim, with forecasters now anticipating no growth or a
decline in output in the final three months of 2020 because of a
second wave of Covid-19 infections.
To date, Canada's fiscal package has totaled roughly 325 billion
Canadian dollars, or the equivalent of $250 billion. Those outlays
represent 17% of Canada's GDP, and additional spending is in the
works, including a revised rent subsidy for businesses and an
extension of existing programs. Ms. Freeland has repeatedly said
fiscal spending would remain aggressive until the economy makes a
full recovery, which the Bank of Canada doesn't expect until
"Our government has prioritized a response to Covid-19" to help
households and businesses, she told legislators as she revealed the
economic update's release date. The update will help chart a path
toward rebuilding "a post-pandemic economy that is robust,
inclusive and sustainable."
Canada's heavy dose of virus-fighting stimulus is having
repercussions. Its fiscal position is deteriorating at the fastest
pace among the Group of 20 industrialized countries, based on data
from the International Monetary Fund. The Canadian government said
in July it projected a budget deficit in the current fiscal year,
ending March 30, 2021, to swell to C$343.2 billion or 15% of GDP,
versus a deficit accounting for 1.5% of GDP in the previous
Meanwhile, the Canadian government debt is expected to surpass
the C$1 trillion mark this fiscal year, or 50% of GDP.
Canada's economy is expected to record annualized growth of
roughly 45% in the third quarter, with official figures due Dec. 1.
That marks a sharp rebound following a nearly 39% plunge in the
Some forecasting firms, however, have scaled back expectations
for the fourth quarter in part because of a second wave of Covid-19
infections that has forced authorities across the country to impose
lockdowns affecting roughly 11% of the population -- including the
city of Toronto, Canada's largest.
BMO Capital Markets, for instance, said it now expects no growth
in the fourth quarter, versus its earlier estimate of 2.3%
Canada has recorded exponential growth in Covid-19 cases this
fall, with the seven- and 14-day averages at 4,900 and 4,700,
respectively, both nearly double from a month ago and well above
the peaks reached in April.
Fitch Ratings moved in June to strip Canada of its triple-A
rating, citing a steep rise in the country's total government debt
-- which incorporates all levels of government -- from 88% last
year to an estimated 115% in 2020. Last week, Moody's Investors
Service reaffirmed its triple-A rating for Canada, arguing recent
history suggests authorities will impose limits on debt growth once
the pandemic subsides.
Write to Paul Vieira at email@example.com
(END) Dow Jones Newswires
November 23, 2020 16:49 ET (21:49 GMT)
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