The Canadian federal government's latest fiscal update reveals a $61.9 billion deficit for 2023-24, exceeding expectations. The statement includes measures to stimulate investment and address economic protectionism from the U.S. However, political instability and trade tensions cast a shadow of uncertainty over the government's plans.
Randall Bartlett, Desjardins senior Canadian economics director, explains the $61.9B deficit reported for 2023-2024 in the fed's fall economic statement. Economists say uncertainty hangs over the federal government’s latest fiscal update, in the form of domestic political volatility and trade tensions with the U.S. hours after Chrystia Freeland, the now former finance minister, announced her resignation from Prime Minister Justin Trudeau’s cabinet.
The Department of Finance’s budget update reported a deficit of $61.9 billion for 2023-24, coming in higher than expected, along with various other measures, some aimed at spurring investment in Canada to counter moves toward economic protectionism from the U.S. “Given the political uncertainty facing Canada, the fate of many of the measures announced in the 2024 Fall Economic Statement is highly uncertain,” economists at Royal Bank of Canada. Some of the highlights of the fiscal update, according to RBC Economics, include the extension for the Accelerated Investment Inventive, which will cost $17.4 billion over six years and had been scheduled to be phased out between 2024 and 2027. “This effort provides enhanced first-year capital cost allowance for most depreciable capital property acquired on or before Jan. 1, 2025, and becomes available for use before 2030,” RBC Economics said in its report. Other measures include $1.3 billion on border security over six years, easing the 30 per cent stake limit for pension funds and a GST holiday. The economists at RBC noted that the fiscal update still provides a “snapshot” of the trajectory of the economy. “Lower revenues and new spending measures have resulted in deeper deficits over the course of the fiscal plan—including a whopping $22 billion downward revision to the 2023-24 bottom line to $61.9 billion. The 2024-25 deficit has also deteriorated by $8.5 billion to $48.3 billion,” the economists sai
CANADA DEFICIT FISCAL POLICY INVESTMENT ECONOMIC UNCERTAINTY
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