The international evidence corroborates Canada’s poor performance during 2020. The IMF recently released its economic and financial analysis of industrialized countries and estimated that Canada will borrow more in 2020 than any other country (35 covered in total) but will suffer the 11th worst recession and 4th highest unemployment rate.
Despite mounting evidence that the status quo isn’t working, this week’s economic update shows no signs of change. While revenues are expected to be $6.6 billion higher than originally budgeted in the government’s fiscal “snapshot” released in July, the deficit has jumped from $343.2 billion to $366.2 billion. And that doesn’t include another $15.4 billion to address shortfalls in federal pensions, bringing the deficit for 2020-21 to $381.6 billion. Total debt (adjusted for financial assets) is now expected to reach $1.2 trillion this year.
Finally, even though the government forecasts a strong recovery in 2021 (4.8 per cent real GDP growth) and a revenue increase of $60.5 billion, it expects to borrow another $121.1 billion because it plans to spend $82.7 billion above its pre-recession levels, which themselves were historically high in terms of per-person (inflation-adjusted) spending.
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