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Budget officer predicts rosier Canada growth

By AFP - Apr 01,2021 - Last updated at Apr 01,2021

OTTAWA — Canada's independent fiscal watchdog on Wednesday said the economy will likely grow faster this year and in 2022 than previously forecast, due to the rollout of Covid vaccines and improving trade prospects.

Parliamentary Budget Officer Yves Giroux projected growth of 5.6 per cent in 2021 and 3.7 per cent in 2022, up by almost a full percentage point in both years compared with his September 2020 outlook.

"The improved outlook reflects higher commodity prices, a stronger US recovery and the earlier-than-expected arrival of effective vaccines," Giroux said in a statement.

"We project employment to reach its pre-pandemic level by the end of 2021 and the unemployment rate to decline steadily through 2022."

Assessing government coffers ahead of Finance Minister Chrystia Freeland's April budget release, Giroux said he expects the deficit to rise to Can$363.4 billion (US$288.8 billion) in the fiscal year ending March 31.

The upcoming year's shortfall -- not including any new spending announcements in the April 19 budget -- would fall to Can$121.1 billion.

The federal debt-to-GDP ratio, meanwhile, will rise to 49.8 per cent of GDP in 2021-22 and then gradually decline to 45.8 per cent of GDP in 2025-26, according to the PBO. These figures are relatively better than in other G7 nations, and up significantly from Canada's pre-pandemic average of about 31 per cent.

The government did not present a 2020 budget, it has said, due to the uncertainties of the coronavirus pandemic.

The last budget presented by Prime Minister Justin Trudeau's administration was in March 2019, when it projected a deficit of Can$19.8 billion for fiscal 2019-2020.

Since then the deficit has ballooned as Ottawa responded to the health and economic crisis by dolling out hundreds of billions of dollars in emergency aid.

This included spending on health care as well as support for households, firms, and vulnerable groups through cash transfers and wage subsidies.

The government in November projected its 2020-2021 deficit to hit a record Can$382 billion, while the national debt is set to double to more than Can$1.2 trillion.

 

 

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