Feds to release fall economic statement on Nov. 3 as economists worry about a recession

Deputy Prime Minister Chrystia Freeland said Friday she will present the government's fall economic statement on Nov. 3 — the first chance for Canadians to get a closer look at Ottawa's books since the spring budget.

The statement comes during a time of rising interest rates and considerable economic uncertainty.

Finance Canada said the statement — which includes a look at the expected deficit and national debt for the coming year as well as details about new planned federal programs — will "provide information on the state of the Canadian economy within a challenging global environment and outline the government's plan to continue building an economy that works for everyone."

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Freeland has toured the country warning Canadians that the coming months could get ugly as the Bank of Canada's rate hikes work their way through the economy, pushing up the cost of borrowing for individuals and businesses.

But there are early signals that Ottawa's fiscal health could be much better than previously thought, thanks to higher oil prices and a growth in personal and corporate taxes in this era of high inflation.

According to figures released Thursday through the Public Accounts of Canada, the government's fiscal ledger, the budget deficit for the 2021-22 fiscal year came in at $90.2 billion — substantially less than the $113.8-billion deficit Freeland projected in her April budget.

Risk of 'more severe global slowdown'

In an economic and fiscal outlook published earlier this month, the Parliamentary Budget Officer (PBO) forecast a budget deficit of $25.8 billion — or 0.9 per cent of GDP — for the 2022-23 fiscal year if the government pursues "status quo policy," which means no major new spending on programs. That is significantly smaller than the April budget's forecast of $52.8 billion.

But Yves Giroux, the PBO, said the central bank's rate hikes to tame inflation risk dumping Canada into a recession.

"With the synchronized tightening of monetary policy by major central banks around the world to reduce high inflation, there is a risk of a more severe global slowdown, which would negatively affect the Canadian economy and federal finances," Giroux said.

"We expect growth in the Canadian economy to slow considerably in the second half of 2022 as consumer spending downshifts and residential investment continues to decline. We project real GDP growth to remain weak through 2023 before rebounding somewhat in 2024," he said.