Feds to update public on books, economy

“While it will get a lot of media chatter, the revised status-quo outlook for the Canadian federal government is neither dramatic nor unexpected”, Avery Shenfeld, chief economist at CIBC Capital Markets, said ahead of Friday’s economic and fiscal update.

The economy has struggled amid weaker-than-expected global growth, stubbornly low commodity prices and the failure of other sectors to pick up the slack from the resources industry.

Justin Trudeau’s Liberals won the October election after pledging to roll out large spending plans in areas such as infrastructure, which the party argued will resuscitate economic growth and create jobs.

This will be the first time the Liberals will open the books to the public since taking power from the Conservatives last month.

The calculations in the update do not account for the big-ticket spending promises in the Liberal platform, nor do they factor in the potential benefits the government expects from the stimulus.

“We will deal with, first of all, addressing the fact that we inherited from the previous government a bare cupboard”, Brison said when asked whether future deficits exceeding $10 billion were out of the question.

The economists downgraded the April projections for real gross domestic product – the common measure of economic growth – to an average of 1.9 per cent from 2015 to 2019, down from 2.1 per cent.

Last month, the Bank of Canada projected GDP growth of 1.1 per cent this year, two per cent in 2016 and 2.5 per cent in 2017.

Without that economic adjustment, the deficits would be C$1.5 billion for 2015-16 and C$3.0 billion for each of the five years from 2016-17 on.

After the government’s budget finally returned to balance after several years in the red, the Liberals campaigned on a pledge to run small deficits in each of the next few years before returning to surplus down the line in 2019-2020.