Canada forecasts lower 2023 growth, possible ‘shallow recession’

OTTAWA  -Canada could fall into a “shallow recession” this year, according to a worst-case scenario outlined in the government’s budget on Tuesday, but Ottawa is planning for a slightly brighter outlook.

Private sector economists surveyed by Ottawa forecast gross domestic product ranging from a contraction of 0.2 percent to growth of 1.6 percent.

The government pegged economic growth at just 0.3 percent, rebounding to 1.5 percent in 2024 — both figures down from previous estimates.

Finance Minister Chrystia Freeland’s budget presented 15 to 30 percent tax credits to spur investment in tidal and nuclear energy, as well as extraction of critical minerals for EV batteries — seeking to narrow a gap with US subsidies for clean technologies.

It offered targeted inflation relief such as a grocery rebate for “the most vulnerable still feeling the bite of higher prices.”

Freeland also highlighted money recently announced for health care, and a new dental care plan for up to nine million uninsured Canadians.

The government vowed to crack down on hidden fees and predatory lending, and to bring in “right to repair” rules for electronics and home appliances, as well as common charging standards for phones and computers — similar to the EU — to cut costs and waste.

Freeland had already slashed spending after doling out pandemic aid that pushed the national debt to a record Can$1.2 trillion.

On Tuesday, she reported a lower deficit in fiscal 2023-2024 than originally expected to Can$40.1 billion.

Canada’s debt-to-GDP ratio, meanwhile, is expected to rise slightly to 43.5 percent before falling in subsequent years.

READ MORE:

Hot core: Canada may need a recession to cool down inflation

Canada’s economy has scope to slow with vacant jobs, central bank chief says