Shrinking Canada Economy Doesn’t Faze Surplus-Projecting OliverAllison McNeely and Josh Wingrove
Canada’s finance minister is confident his government will post a budget surplus this fiscal year even as the economy faces a possible recession after four straight monthly declines.
Joe Oliver spoke Thursday after Statistics Canada reported this week that gross domestic product shrank by 0.1 percent in April, on the heels of a 0.6 percent annualized contraction in the first quarter. His political opponents want him to release a fiscal update in light of the sluggish figures, saying Canada’s 2015-16 budget is not actually balanced heading into a fall election.
“We’re very comfortable,” Oliver told a business audience in Toronto. “I think we’re going to meet our projected surplus this year of C$1.4 billion ($1.1 billion).”
The Canadian government’s latest fiscal monitor report showed a monthly deficit of C$3 billion in March, down from C$6.7 billion a year earlier. Reports for April and May will be released at the end of this month.
Government projections are based on a survey of 15 private-sector economists, whose most recent forecast was for 2 percent GDP growth this year. April’s budget included that forecast and Oliver said he has not wavered from it.
“Some of the banks have moved down in their forecast. We haven’t met again with the private sector forecasters as a group so that number has not been adjusted,” Oliver said. If there is a change in GDP forecasts, “it would come from outside and not from our own internal calculations.”
Oliver declined to comment when asked whether stimulus is needed to counter the economic contraction. Instead, the finance minister said oil prices have remained above the government’s forecast of late, even as the economy has shrunk.
Finance officials also declined to comment after the latest GDP figures were published Tuesday.
A federal election is scheduled for Oct. 19 and Oliver’s spring budget projected a surplus after a run of of seven consecutive deficits. Public opinion polls show Prime Minister Stephen Harper’s governing Conservative Party in a tight three-way race with the New Democratic Party and the Liberals.
Nathan Cullen, finance critic for the official opposition NDP, said the Conservatives are now “more than anybody assumes” politically vulnerable on economic issues.
“They assume their strategy will work,” Cullen said in an interview Tuesday. “Rather than use experience, they just keep relying on blind faith and hope, and it’s not working.”
Liberal finance critic Scott Brison called on Oliver to update his budget forecasts. “On the eve of an election, the government has pinned its fiscal forecasts on unrealistically rosy projections,” Brison said in an interview Tuesday.
“The reality is, with the growth numbers we’re seeing, we’re in deficit,” he said. “This is why they should immediately do a fiscal update to tell Canadians the truth.”
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