Harper Says Slowing Canada Economy to Have Fiscal ImpactSean B. Pasternak and Theophilos Argitis
Canadian Prime Minister Stephen Harper said a slowing economy will affect the government’s finances and impede employment.
“There has been a general slowing of the economy over the past, really the past half-year so it is obviously a concern to us,” Harper told reporters in Cambridge, Ontario. “This is obviously going to have some fiscal impact on us, will have some impact on the pace of job creation.”
Canada’s economy probably had its worst six-month performance since the end of the 2009 recession in the second half of last year, as exports fell and concerns about the global expansion prompted businesses to curb spending, leading economists and policy makers to scale back their expectations for 2013.
The Bank of Canada cut its forecast for 2012 GDP growth today to 1.9 percent from an October projection of 2.2 percent, and 2 percent in 2013 from 2.3 percent.
Finance Minister Jim Flaherty, seeking to return the country to surplus while ensuring fiscal tightening doesn’t impede growth, scaled back revenue projections in a November budget update by C$7 billion ($7 billion) for the next fiscal year and by C$36 billion over five years, citing lower commodity prices.
A person with direct knowledge of the government’s budget planning told Bloomberg News the deteriorating revenue outlook is making it more difficult to bring the budget into balance as planned by 2015.
Still, Harper said that he has been encouraged by recent job gains in the Canadian economy.