Morneau still com­mit­ted to deficit re­duc­tion de­spite slower econ­omy

The Standard (St. Catharines) - - NATIONAL -

LON­DON, Ont. — Canada’s red­hot econ­omy is in­deed likely to slow down this year, mak­ing fed­eral in­vest­ments in boost­ing eco­nomic growth and job cre­ation all the more im­por­tant, Fi­nance Min­is­ter Bill Morneau said Fri­day.

As the fed­eral Lib­eral cabi­net pre­pared for a sec­ond day of meet­ings at its re­treat in Lon­don, Ont., Morneau stopped to sing the praises of his govern­ment’s eco­nomic agenda, which he cred­its for the econ­omy’s su­per-charged per­for­mance over the last year.

“The econ­omy has per­formed ex­cep­tion­ally well in 2017,” he said. “The kinds of things we’ve done to help Cana­dian fam­i­lies has a had a real dif­fer­ence on our econ­omy.”

Among other things, un­em­ploy­ment fell to 5.7 per cent in De­cem­ber, the low­est fig­ure since com­pa­ra­ble data be­came avail­able in Jan­uary 1976.

In his fall fis­cal up­date in Oc­to­ber, the min­is­ter pre­dicted the econ­omy would grow 3.1 per cent for 2017 as a whole.

That strong growth rate won’t be matched this year, how­ever, Morneau con­ceded.

In its own lat­est fore­cast, Sco­tia­bank is pre­dict­ing growth of just 2.3 per cent this year, while TD Bank’s most re­cent pre­dic­tion says Canada’s on pace for 2018 growth of around 2.4 per cent. Both also agree the rate will slow down even fur­ther in 2019.

Morneau said the govern­ment rec­og­nizes the im­por­tance of be­ing fis­cally re­spon­si­ble and re­mains com­mit­ted to re­duc­ing an­nual deficits over the long term.

In his fall up­date, Morneau pro­jected a deficit of $19.9 bil­lion in the 2017-18 fis­cal year — al­most $9 bil­lion less than pre­dicted in his bud­get last spring.

He also pro­jected that the deficit would drop over the next five years, to $12.5 bil­lion in 2022-23.

This year’s deficit pro­jec­tion in­cludes $1.5 bil­lion for “risk ad­just­ment” — a fig­ure that might be in­creased go­ing for­ward to ac­count for ad­di­tional risks to the econ­omy, such as the po­ten­tial demise of the North Amer­i­can Free Trade Agree­ment.

“We’re con­tin­u­ing to work on our bud­get 2018 and one of the things we will con­sider is the ap­pro­pri­ate con­sid­er­a­tion of risk, as we’ve done in pre­vi­ous times,” Morneau said Fri­day.

How­ever, he ac­knowl­edged eco­nomic growth will be “more mod­est” this year.

“We’re al­ways fac­ing chal­lenges. We face long-term de­mo­graphic chal­lenges, we face global risks that might im­pact global growth. So we need to be fo­cused on how we can con­tinue to en­cour­age growth in our econ­omy.”

NATHAN DENETTE/THE CANA­DIAN PRESS

Min­is­ter of Fi­nance Bill Morneau speaks to the me­dia be­fore the Lib­eral cabi­net re­treat in Lon­don, Ont., on Fri­day.

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