The government's spending watchdog has released another report that flies in the face of the Conservatives' assessment of the Canadian economy.
Canada's federal deficit will balloon to a cumulative $155.9 billion over the next five years, and the nation will remain in the red until at least 2014, Parliamentary Budget Officer Kevin Page says in a five-year economic outlook released Wednesday.
The report also predicts that despite the government's stimulus plans, 1.2 million Canadian jobs will be shed over the next two years.
The report's predictions are far less rosy than those put forward by Finance Minister Jim Flaherty. He predicted a $100 billion cumulative deficit over five years, ending with a $700 million surplus in 2014.
Most frightening for fiscal conservatives is that Page predicts that in five years Canada will have a permanent structural deficit in place.
The new report also predicts Canada's jobless numbers will rise significantly before they begin to decline, and GDP growth will fall further in 2009 and 2010, before beginning to recover in 2011.
"Based on the June 2009 PBO survey of private sector forecasters, the outlook for nominal GDP is substantially lower than the government's risk-adjusted projection in Budget 2009; as well, the outlook for the unemployment rate is significantly higher than expected at the time of Budget 2009," the report states.
Following are some key findings from the report:
- Between 2009-2010 and 2013-2014, cumulative budgetary deficits are expected to hit $155.9 billion
- The budget deficit is expected to peak at $48.6 billion in 2009-2010
- The deficit is predicted to improve to $16.7 billion by 2013-2014
- Unemployment will peak at 9.4 per cent in 2010, then decline in subsequent years to 8.9 per cent, 8.1 per cent, 7.2 per cent and 6.8 per cent in 2014
The report acknowledges there is a high degree of uncertainty in estimating potential outputs and budget balances, but comes to the conclusion that the budget "is not structurally balanced over the medium term."
"That said, the structural deficits projected in 2012-13 and 2013-14 are small relative to the size of the economy."
