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Avery Mullen, Financial Post Staff<\/span> <\/div><\/div>\n<\/picture>In its latest two-year outlook, Hope at Last, the Conference Board of Canada anticipates Canadian GDP will expand 5.8 per cent in 2021 and 4 per cent in 2022.<\/span> Photo by Peter J. Thompson\/National Post files<\/span> <\/figcaption><\/figure>\n<\/div>\n\n
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The Canadian economy is starting to find its feet, but historic debt levels could plague the government for years to come, with GDP growth slowing towards the middle of the decade, according to new forecasts.<\/p>\n
In its latest two-year outlook, Hope at Last, the Conference Board of Canada anticipates Canadian GDP will expand 5.8 per cent in 2021 and 4 per cent in 2022. TD Bank Group also raised its forecast for the GDP to grow to around 6 per cent this year on Tuesday, while earlier this month, Royal Bank of Canada had upgraded its estimate for the Canadian economy to 6.3 per cent this year, from 5 per cent previously.<\/p>\n<\/div>\n<\/div>\n
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\u201cWe\u2019ve had an economy that\u2019s lost about 5.4 per cent of its GDP, its income generation, in 2020,\u201d Pedro Antunes, chief economist at the Conference Board, told the Financial Post in an interview. \u201cAnd we\u2019ve essentially infused support and other measures\u2026 worth probably around 15 per cent of GDP. So, we\u2019ve borrowed that much to put back into the hands of households and consumers.\u201d<\/p>\n<\/div><\/div>\n
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In the report, Antunes said despite the economic rebound, Canada\u2019s government debt load has become \u201cuncomfortably high,\u201d and might necessitate fiscal austerity as soon as mid-decade, which could restrain the country\u2019s future growth prospects.<\/p>\n<\/div>\n<\/div>\n
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\u201cI do think governments need to start thinking about this and planning forward,\u201d he said. \u201cI mean, will we see something in the federal budget that speaks to the longer-term challenges? Because there\u2019s some very real challenges that we\u2019re going to be left with here.\u201d<\/p>\n<\/div>\n
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\nI do think governments need to start thinking about this and planning forward<\/p>\n
Pedro Antunes, chief economist, Conference Board of Canada<\/p>\n<\/blockquote><\/div>\n
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The federal government is set to unveil its first budget in two years on April 19.<\/span><\/p>\n<\/div>\n<\/div>\n\n
Canada\u2019s debt-to-GDP ratio now stands at more than 100 per cent, and the federal government has set aside another $70 billion to $100 billion of additional stimulus, to repair the economy after a COVID-induced recession last year.<\/p>\n<\/div>\n
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But these expenses will need to be paid for.<\/p>\n<\/div>\n
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\u201cRight now, nobody wants to talk\u00a0about it because nobody wants to impose tax measures or fiscal austerity at a\u00a0time when the economy is still such in such bad shape,\u201d Antunes said. \u201cBut I do\u00a0think governments need to start\u00a0thinking about this and planning forward.\u201d<\/p>\n<\/div>\n<\/div><\/div>\n
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Article content<\/h2>\n After that, the recovery will hinge on public health and vaccination programs. Antunes said his projections count on the pandemic being largely over in Canada by fall.\u00a0Prime Minister Justin Trudeau has set a target for every Canadian to have access to the vaccines by September.<\/p>\n
RBC economists Craig Wright, Dawn Desjardins and Nathan Janzen revised their growth projections upwards for every province, partly because mass vaccinations are now on the horizon.<\/span><\/p>\n A health-care worker administers a dose of the Pfizer-BioNTech Covid-19 vaccine at a community vaccination clinic in Ottawa, on Tuesday.<\/span> Photo by Sean Kilpatrick\/The Canadian Press\/Bloomberg<\/span> <\/figcaption><\/figure>\n\u201c<\/span>The projected rise in vaccinations will allow restrictions to be eased and eventually eliminated clearing the path for spending on services to bounce back in the second half of 2021,\u201d RBC said in its report. \u201cGovernment support for unemployed workers will continue in 2021 though demand will decline over the course of the year as the economy reopens and workers are rehired.\u201dCanadians have increased their savings dramatically, but analysts believe it is difficult to predict whether those savings will translate into pent-up consumer demand. RBC estimates <\/span>households\u2019 stockpiled around $200 billion in excess savings last year.Conference Board\u2019s Antunes said the savings rate could be good news: \u201cEither way you look at it, it\u2019s not bad for you to have households have a little bit more reserves in their savings,\u201d he said. \u201cWe were very concerned about households up until 2020, about how low the aggregate savings rate was.\u201d<\/span><\/p>\n<\/p><\/div>\n\nBreadcrumb Trail Links News Economy Canada\u2019s government debt load ‘uncomfortably high,’ and fiscal austerity may be needed as soon as mid-decade Author of the article: Avery Mullen, Financial Post Staff…<\/p>\n","protected":false},"author":2,"featured_media":8439,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":{"0":"post-8438","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy"},"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/8438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=8438"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/8438\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/8439"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=8438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=8438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=8438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}