Canada must remain “fiscally responsible” in responding to tough economic times as forecasts of a recession grow louder, Justin Trudeau says.
Prominent officials, including former Bank of Canada governor Mark Carney, have warned this week that Canada and the world are heading toward a recession in the coming months due to several global factors.
The prime minister, whose government got its GST tax credit into law on Tuesday, told reporters in Vancouver on Friday that while the Liberals are trying to get inflation-relief measures out the door, those supports are “targeted.”
“We know that we need to help people who need help without putting at risk our fiscal stability or contributing further to inflation,” Trudeau said.
“That’s why remaining fiscally responsible and measured in our response is essential because we have to prepare for whatever might come in the coming weeks and months.”
Recession forecasts grew louder this week after the International Monetary Fund on Oct. 11 cut its global growth forecast for 2023. Russia’s Ukraine war, high energy and food prices, inflation and sharply higher interest rates factored into the IMF’s report, which indicated a third of the world economy will likely contract by next year.
Carney on Thursday told a Senate committee that Canada is likely headed for a recession next year amid “difficult economic times,” but backed the Liberal government’s current “fiscal discipline” in tackling high inflation.
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On Wednesday, Deputy Prime Minister and Finance Minister Chrystia Freeland said the nation was going to face an “economic slowdown” soon. She teased 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.”
Freeland did say Canada has the fiscal capacity to get through the “challenging days” ahead.
“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.”
When it comes to inflation, it has been stubbornly high in Canada this year. 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.
On Wednesday, Statistics Canada reported that food prices continued to soar across the country in September, even as the annual rate of inflation cooled to 6.9 per cent.
On Friday, Trudeau said he has heard about the challenges Canadians are currently facing. He brought up his government’s GST tax credit for the most vulnerable Canadians, as well as the dental care and rent support packages the Liberals are trying to put into law.
“We’ve made a commitment to be there for Canadians as a government,” Trudeau said.
“And we will with direct, targeted supports for those who need it most, and the ability to respond in case things get worse for families across the country.”
— with files from Global News’ Craig Lord