Canadian Deficit Forecasted to Be Much Higher
CBJ — Canada’s federal fiscal deficit over the next five years will be $16.5 billion more than what the government forecast in its March budget, according to a TD Economics report.
Federal Finance Minister Bill Morneau’s budget projected a deficit of $29.4 billion in the current fiscal year, followed by a $29-billion shortfall the next year and a $22.8-billion deficit in 2018-19.
But a weakened outlook for Canadian economic growth in the medium term will hit the federal government’s coffers, the report said. In the current fiscal year, the federal deficit is expected to hit $34 billion, about $5 billion higher than what Ottawa projected, according to projections by TD’s expert economists.
“The economic situation in Canada has deteriorated since budget 2016, impacted not just by wildfires but also by serially disappointing underlying momentum,” TD Economics’ chief economist Beata Caranci wrote in the report.
TD’s sobering warning to Ottawa comes as Morneau met with a group of private-sector economists to seek their projections. The government is expected to provide a fall economic and fiscal update in the coming weeks.