ITS THE ECONOMY STUPID

It would be a gross understatement to say that the outlook for the global economy is not good.

In its October 2014 World Economic Outlook (WEO), the International Monetary Fund (IMF) reduced its forecast for global economic growth to 3.3 percent for 2014, 0.4 percentage points lower than in the April 2014 WEO. The global growth projection for 2015 was lowered to 3.8 percent. China accounts for one-third of this growth and without China growth for the global economy would be less than 2.5 per cent.

 

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BUDGET FORECASTING AND A FALL MINI BUDGET

It should not have come to anyone’s surprise that the announcement by the Prime Minister that the federal deficit for 2013-14 was $5.2 billion, substantially lower than the $16.6 billion forecast in the February 2014 budget.

Deficit targets have become political targets. The fiscal credibility of a government depends on achieving or doing better on its deficit targets. Failure by a government to hit its deficit targets is not looked on kindly by bond markets or by the rating agencies.

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DARK CLOUDS ON THE HORIZON

Most Canadians paid little, if any attention to the meeting of G-20 Finance Ministers in Cairns, Australia over a week ago. Too bad, because the communiqué that they issued at the end of their meeting showed that they are very concerned about the prospects for the global economy. It will be interesting to see how the up coming meeting of the G-20 Leaders respond to their Finance Ministers report.

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WELCOME BACK MR. OLIVER

You have been Minister of Finance now for about six months. Parliament will resume sitting this week and the House of Commons Standing Committee on Finance has already begun its pre-budget consultations.

 

You may be wondering what exactly you should do over the next 6 months leading up to the 2015 budget. Expectations are already running very high for this budget and a failure to fulfill these expectations could have serious political consequences.

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WE'LL (aka deficits) BE BACK

The federal government is on track to eliminate the deficit by 2015-16. The last time the federal government recorded a surplus was in 2007-08, with a surplus of $9.6 billion, following a string of surpluses that began in 1997-98. Over the previous three decades a surplus has been recorded in only one year.

 

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A GOVERNMENT WITHOUT A JOBS STRATEGY

What a difference a summer “does not make”.

 

On Friday last week, Statistics Canada released its Labor Force Survey for the month of August. The Survey showed that the economy lost 11,000 jobs in August, following an unprecedented decline of 112,000 private sector jobs, only partially offset by an equally unprecedented increase in self-employment.

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