Canada’s unchecked deficits raise major risks

While Canada will likely be recession-free next year as real GDP is forecast to expand by 1.8 percent in 2020 and 1.9 percent in 2021, continued deficits could become a serious problem.
While Canada will likely be recession-free next year as real GDP is forecast to expand by 1.8 percent in 2020 and 1.9 percent in 2021, continued deficits could become a serious problem.

While Canada will likely be recession-free next year as real GDP is forecast to expand by 1.8 percent in 2020 and 1.9 percent in 2021, continued deficits could become a serious problem.

According to a newly released report by the Conference Board of Canada, uncertainty on global trade, slow global economic growth, and disappointing non-resource business investment in Canada will persist, while the nation skids past a recession.

The Board also pointed to disappointing none-resource business investments which shrank by $2.7 billion since 2014.

While the government has continued to invest massive amounts through deficit spending, the Conference Board has warned that the nation is already running at full capacity, raising potential risks of sky-high deficits should the economy take a dip.

“The fact that federal and provincial governments are running significant deficits when the economy is operating near its full potential creates the risk that deficits will balloon when the economy finally experiences a recession in the years ahead,” said Director Matthew Stewart.

To provide a perspective of how much just the federal government is spending during a time when the economy has been running at peak, team Trudeau is currently expected to add over $100 billion to the national debt over the next four years.