Canada’s government needs to inject at least C$50 billion ($35.9 billion) into the resource-rich nation’s struggling economy to help weather the collapse in oil prices and stimulate growth, according to economist David Rosenberg.
“We are one of the few countries in the world that actually has that latitude to engage in fiscal stimulus,” the chief economist and strategist at Gluskin Sheff & Associates Inc. said in an interview with Pamela Ritchie on Bloomberg TV Canada in Toronto. “It’s got to be in smart infrastructure. There are areas of the economy in transportation infrastructure, communication, that could have tremendous multiplier impacts.”
Canada’s 10-year government bond yield fell to as low as 1 percent Wednesday, extending a record, and down from 1.46 percent on Oct. 19, when Prime Minister Justin Trudeau’s Liberal Party won power promising to stimulate the economy with deficit spending. Trudeau campaigned on three years of shortfalls not exceeding C$10 billion each but has abandoned that cap as conditions worsened.
“You can’t rely on monetary policy alone, you need to have a fiscal response,” Rosenberg said. “We still have the ability and now we have the willingness.”