Ottawa, (Samajweekly) The Canadian government has unveiled its 2023 federal budget with higher deficits, as economists expected a shallow recession in 2023.
The budget, titled “A Made-in-Canada Plan”, showed that the federal deficit is projected to be C$43 billion ($32 billion) this fiscal year and C$40.1 billion in fiscal year 2023-2024, reports Xinhua news agency.
The cumulative budget deficits are billions of dollars higher between fiscal year 2022-2023 and 2027-2028, relative to the 2022 Fall Economic Statement.
The increase results from a slowing economy and huge new spending in federal-provincial-territorial health deals, the federal dental plan and green investment.
Net new spending totals C$46 billion over six years, with roughly C$70 billion in gross new spending offset by C$24 billion in revenue measures and expected cost savings.
However, Canada’s net debt as a share of the economy is still lower than in any other G7 country.
Debt-to-GDP ratio falls to 42.4 per cent in fiscal year 2022-2023 and is forecasted to hover around the level.
According to a recent survey conducted by the Finance Ministry, with higher interest rates, as well as slower economic growth in the USand around the world, private sector economists expected the Canadian economy to enter a shallow recession in 2023.
With a peak-to-trough decline of just 0.4 per cent, the contraction in real GDP is less severe than the 1.6 per cent decline considered in the 2022 Fall Economic Statement downside scenario.
On an annual basis, real GDP growth is projected to decelerate from a strong 3.4 per cent in 2022 to 0.3 per cent in 2023, before rebounding to 1.5 per cent in 2024.
As the economy slows, Canada’s near record-low unemployment rate is expected to rise to a peak of 6.3 per cent by the end of 2023, the economists predicted.
