Minister of Finance Bill Morneau listens to a question during a news conference in Ottawa, Thursday, Oct. 20, 2016.
OTTAWA – A slipping Canadian economy, highlighted by another downgraded Bank of Canada forecast, could add billions of dollars to the federal deficit, as Finance Minister Bill Morneau is cautioning the government’s Nov. 1 fiscal update will show economic challenges have been greater than expected.
The day after the central bank lowered its economic outlook again, Morneau met with his Advisory Council on Economic Growth and released the panel’s initial set of recommendations on how to boost the Canadian economy over the long term, including creating a new infrastructure bank; creating a foreign direct investment agency; and dramatically boosting immigration.
Yet, staring Morneau and the advisory council in the face is lower short-term growth than expected in the spring budget and, what economists say, is almost certainly eroding federal finances.
“Yes, the challenges have been greater than might have been expected at the time of the budget. That’s why we took a factor for prudence and that’s why we are working today with this council to think about how we deal with those very real challenges,” Morneau, flanked by advisory council chairman Dominic Barton, told reporters Thursday in Ottawa.
Slower-than-expected growth in the United States, a rebalancing of the Chinese economy, and the fallout of the Fort McMurray wildfires are some of the challenges that have affected the Canadian economy, he said.