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Is Canada facing recession? Freeland says fall fiscal update will reflect gathering storm

Click to play video: 'Freeland says Canadian, world economies heading toward slowdown'
Freeland says Canadian, world economies heading toward slowdown
Speaking in Windsor, Ont. on Wednesday, Deputy Prime Minister Chrystia Freeland warned that the Canadian and world economy is heading for an economic slowdown. Freeland also defended the federal government’s policy response, saying that “the government simply cannot compensate every single Canadian for every single additional cost imposed by elevated global inflation. If we were to try to do that, we would be pouring fuel on the inflationary flames.” – Oct 19, 2022

Canada is facing some “difficult days ahead,” but whether or not the government expects the economy to tip into recession will be reflected in the feds’ upcoming fall forecast, Chrystia Freeland says.

Speaking in Windsor, Ont., on Wednesday afternoon, the finance minister and deputy prime minister told reporters that Ottawa will share with “some precision” its projections for the economy in its fall economic statement. Freeland did not specify when the statement will be released, but said Ottawa will be sharing a date for it in the “days to come.”

Read more: Food prices soared in September even as inflation slowed overall

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Click to play video: '‘The world gets a little bit harder’: Inflation cools slightly, high food prices eat at Canadians’ bottom line'
‘The world gets a little bit harder’: Inflation cools slightly, high food prices eat at Canadians’ bottom line

Earlier in the day, Freeland said in a speech an economic slowdown was coming for the world and that Canada has the fiscal capacity to get through the “challenging days” ahead.

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“There are still some difficult days ahead for Canada’s economy and for the economies of all of our friends and allies around the world,” she said.

“We are ensuring that Canada has and will have the fiscal capacity to support those who need it today and in the challenging days ahead. We will get through the economic slowdown that is coming for Canada and the world.”

Click to play video: 'Reports paint bleak economic picture heading into 2023'
Reports paint bleak economic picture heading into 2023

Her comments came as Statistics Canada reported Wednesday that food prices continued to soar across the country in September, even as the annual rate of inflation cooled to 6.9 per cent.

When asked about affordability challenges Canadians are facing, Freeland said the Liberals’ GST tax credit that became law on Tuesday will help the most vulnerable Canadians. Those who are eligible for the GST rebate will receive an additional lump-sum payment equivalent to the amount in the rebate cheques that will be sent in October and January.

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Click to play video: 'Bank of Canada Governor Tiff Macklem speaks on inflation, rising interest rates'
Bank of Canada Governor Tiff Macklem speaks on inflation, rising interest rates

The Liberals are also trying to get Bill C-31 into law, which includes a new dental-care benefit for children under 12 in low and modest-income families, and a one-time $500 allowance for low-income renters.

But she appeared to temper any expectations of bigger, broader spending.

“The fact is that the government simply cannot compensate every single Canadian for every single additional cost imposed by elevated global inflation,” she said.

“If we were to try to do that, we would be pouring fuel on the inflationary flames, we would just be making the Bank of Canada’s job harder and ensuring that inflation lasted longer and that rates went up even higher.”

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The Bank of Canada has been raising its policy interest rate throughout the year in an effort to cool rising inflation that has exacerbated the cost of living in Canada and around the world.

— with files from Reuters and The Canadian Press

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