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Recession risk? What’s being said at Trudeau’s retreat


As Prime Minister Justin Trudeau gathered his cabinet for a retreat before returning to Parliament to map out their priorities for 2023, the main focus of the conversation was on concerns about the cost of living of Canadian.

Furthermore, the question raised at the ministers’ meeting was how the Liberals plan to pay for their domestic and international political commitments as well as a potential deal worth thousands of dollars. billion dollars with provinces on health care, while keeping in mind the risk of recession.

As Trudeau meets with his front bench, a new report from the Business Council of Canada and Bennett Jones warns that there is a “high risk” the Liberals will not be able to follow through on all of their spending plans. without switching to a more conservative plan. financial tracking.

Helping the cabinet assess the economic situation on Tuesday, ministers heard from a trio of top economists ahead of what is expected to be another rate hike by the Bank of China. Canada on Wednesday.

So what is being said about all of this at the federal cabinet retreat?

Here are some key quotes.

DEPUTY PRIME MINISTER AND FINANCE MINISTER CHRYSTIA FREELAND

“We’ve talked a lot about the work we’re doing as a government, what Canadians are doing, Canadians, Canadian businesses, to enhance Canada’s economic capacity to promote We’ve talked a lot about the challenges ahead. There’s a lot of uncertainty, a lot of volatility in the global economy. And we also talked about the position of strength from which Canada entered this challenging period,” Freeland said during a discussion with reporters at the retreat on Tuesday.

“We need to continue to take a fiscally prudent approach. We still don’t know for sure how the plane will land. We don’t know for certain how the COVID recession will ultimately play out. … So some things are challenging to all do at the same time, and that’s the balance we’re going to have to find within the budget,” she said.

MINISTER OF FINANCE RANDY BOISSONNAULT

“We’ve seen a downturn in the economy, and that means we’re going to have to make some really serious choices about how we invest in Canadians, how we grow. economic development. , the amount that we have to invest in the budget [2023] so we make smart choices for the future… Since what we’re seeing with inflation, which is still around 6.3%, which is three times higher than we expected, we will continue to see the economy slow. So 2023 will be a tumultuous economic year,” Boissonnault said in an interview on CTV News Channel’s Power Play with Vassy Kapelos, live from Tuesday’s retreat.

“That means we’re going to face some tough times as Canadians. And that’s why our support for Canadians will continue. have been through this before and the economic fundamentals of the economy are good… After 2023, the future is very bright for Canada. We could go into international reasons for that, but through The bottom line is that we’re going to have to make some really clear choices for Canadians in this budget,” he said.

Former Senior Vice President of United Bank of Canada CAROLYN WILKINS

“You know, what people think in their heads is: ‘Where are interest rates going to stabilize? And if they go down, or when they go down, how quickly and by how much?’ … There are downside risks to the economic outlook It’s clear that so far we haven’t seen the full impact of interest rates as they take time to act. And many, many forecasters The newspaper said it’s actually going to be in the first three years of the quarters of this year that we see an impact on GDP growth and employment,” Wilkins said during a discussion with reporters at the retreat. on Tuesday.

“And that should lower inflation further. On the other hand, we see China opening up, we see there’s still some tightening in the labor market in Canada, the US and other countries. And that has This could mean that inflation will continue to be slightly higher, or stay flat, at lower levels than it is today, but still above the 2% inflation target many of us have set, and therefore interest rates will be lower. must increase more or stay at a higher level for a longer period of time,” she said.

University of Economics BRITISH COLUMBIA PROFESSOR KEVIN MILLIGAN

“Right now, as we look at the new commitments that are being made, we have to wait and see what happens in the health agreement. You know, I suspect that there won’t be a lot of terrible things. about that, it’s going to be a long-term deal so it shouldn’t have much of an impact on short-term considerations… We’re still in a situation where the Bank of Canada is paying attention to what happens to If you go too far, too quickly, the Bank of Canada will simply rearrange things and make the interest rate environment more difficult,” Milligan said in a discussion with reporters. members at Tuesday’s retreat.

“I think it’s very likely that next year there will be a soft period in the economy. And I think all policymakers should keep that in mind. Whether that guarantees that the system protects Whether it’s thinking about another stream of income transfers to lower income people in a targeted way, those are the kinds of policy measures you can consider. when the economy is in trouble,” he said.

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