Office of the Parliamentary Budget Officer
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Economic and Fiscal Outlook – September 2020

PDF
Kristina Grinshpoon; Tim Scholz; Robert Behrend; Étienne Bergeron; Tessa Devakos; Eskandar Elmarzougui; Jamie Forsyth; Jill Giswold; Raphaël Liberge-Simard; Sarah MacPhee; Salma Mohamed Ahmed; Nora Nahornick; Caroline Nicol; Diarra Sourang; Nigel Wodrich
Published on September 29, 2020 PDF

This report provides a baseline projection to help parliamentarians gauge potential economic and fiscal outcomes under current policy settings. PBO’s outlook is not a prediction of future economic and budgetary outcomes.

This report incorporates announced federal budgetary measures up to and including 1 September 2020. Financial results for fiscal year 2019-20 shown in this report are PBO estimates and not final Public Accounts results.

Communications

News Release

{"id":3,"created_at":"2020-09-29T09:41:44-04:00","updated_at":"2021-02-25T15:07:04-05:00","slug":"COM-2021-003--permanent-hit-to-the-canadian-economy-from-pandemic-and-lower-oil-prices-federal-debt-ratio-elevated-but-stable-under-current-policy--leconomie-canadienne-est-touchee-de-maniere-permanente-par-la-pandemie-et-la-chute-des-prix-du-petrole","title_en":"Permanent hit to the Canadian economy from pandemic and lower oil prices; Federal debt ratio elevated but stable under current policy, says PBO","title_fr":"L\u2019\u00e9conomie canadienne est touch\u00e9e de mani\u00e8re permanente par la pand\u00e9mie et la chute des prix du p\u00e9trole; le ratio de la dette f\u00e9d\u00e9rale est \u00e9lev\u00e9, mais stable avec la politique actuelle, selon le DPB","body_en":"The Parliamentary Budget Officer (PBO) today released his latest Economic and Fiscal Outlook. The report incorporates announced federal budgetary measures as of September 1, 2020 and does not reflect any of the commitments made in the recent Speech from the Throne.\n\nThe PBO\u2019s report provides a baseline projection to help parliamentarians gauge potential outcomes under current policy settings. **It is not a prediction of future economic and budgetary outcomes**. The outlook assumes that the pandemic will follow a \u201cslow burn\u201d scenario.\n\nCompared to the PBO\u2019s November 2019 outlook, real GDP is projected to be 3.6 per cent lower in the fourth quarter of 2021 and 1.6 per cent lower by the end of 2024.\n\u201cWe expect that the COVID-19 pandemic and oil price shocks will have a permanent impact on the Canadian economy,\u201d says PBO Yves Giroux. \u201cAs the labour market recovers and household and business confidence improve, the economy will slowly recuperate, with real GDP projected to reach its pre-crisis level by early-2022.\u201d\n\nAccording to the PBO, the federal deficit under current policy is projected to be $328.5 billion in 2020-21, including an estimated $226 billion in COVID-19 response measures. Relative to the size of the economy, the deficit amounts to 15 per cent of GDP\u2014the largest budgetary deficit since the beginning of the series in 1966-67.\n\nBased on current policy, but not considering possible measures related to the Speech from the Throne, the record increase in spending in 2020-21 should be temporary. In such a case, the PBO projects the budgetary deficit to decrease to $73.8 billion (3.2 per cent of GDP) in 2021-22 and continue to decline thereafter.\n\nIn addition, without new expenditures the PBO projects the federal debt ratio to peak at 48.3 per cent of GDP in 2022-23 but then gradually decline over the medium term. \n\u201cDespite the record deficit this year and the persistent deficits that are likely to follow, as long as COVID-19 spending measures are temporary and no new spending measures are introduced, the Government\u2019s debt-to-GDP ratio will gradually decline from its peak,\u201d adds Mr. Giroux. \u201cBased on a return to pre-crisis policy settings and our economic outlook, federal fiscal policy over the medium term would be sustainable.\u201d","body_fr":"Le directeur parlementaire du budget (DPB) a publi\u00e9 aujourd\u2019hui ses plus r\u00e9centes perspectives \u00e9conomiques et financi\u00e8res. Elles tiennent compte des mesures budg\u00e9taires f\u00e9d\u00e9rales annonc\u00e9es en date du 1er septembre 2020, mais pas des engagements annonc\u00e9s dans le r\u00e9cent discours du Tr\u00f4ne.\n\nLe rapport du DPB fournit une projection de base pour aider les parlementaires \u00e0 \u00e9valuer les r\u00e9percussions possibles de la politique actuelle. **Il ne s\u2019agit pas d\u2019une pr\u00e9vision des r\u00e9sultats \u00e9conomiques et budg\u00e9taires \u00e0 venir**. Les perspectives supposent que la pand\u00e9mie se poursuivra.\n\nPar rapport aux perspectives du DPB de novembre 2019, le PIB r\u00e9el devrait \u00eatre inf\u00e9rieur de 3,6 % au quatri\u00e8me trimestre de 2021 et de 1,6 % \u00e0 la fin de 2024.\n\u00ab Nous nous attendons \u00e0 ce que les chocs dus \u00e0 la pand\u00e9mie de COVID-19 et \u00e0 la chute des prix du p\u00e9trole aient un impact permanent sur l\u2019\u00e9conomie canadienne, a d\u00e9clar\u00e9 le DPB, Yves Giroux. Au fur et \u00e0 mesure que le march\u00e9 du travail se redressera et que la confiance des m\u00e9nages et des entreprises s\u2019am\u00e9liorera, l\u2019\u00e9conomie reprendra lentement son souffle, et le PIB r\u00e9el devrait retrouver son niveau d\u2019avant la crise au d\u00e9but de l\u2019ann\u00e9e 2022. \u00bb\n\nSelon le DPB, en incluant les mesures gouvernementales pr\u00e9sentement en place et celles dont l\u2019expiration est pr\u00e9vue, le d\u00e9ficit f\u00e9d\u00e9ral devrait s\u2019\u00e9lever \u00e0 328,5 milliards de dollars en 2020-2021, dont 226 milliards de dollars pour les mesures de r\u00e9ponses \u00e0 la COVID-19. Par rapport \u00e0 la taille de l\u2019\u00e9conomie, le d\u00e9ficit s\u2019\u00e9l\u00e8ve \u00e0 15 % du PIB, soit le plus lourd d\u00e9ficit budg\u00e9taire depuis le d\u00e9but de la s\u00e9rie en 1966 1967.\n\nEn se basant sur les politiques gouvernementales en cours mais en excluant les mesures potentielles du Discours du tr\u00f4ne, l\u2019augmentation record des d\u00e9penses en 2020-2021 devrait \u00eatre temporaire. Dans ce cas, le DPB pr\u00e9voit en effet que le d\u00e9ficit budg\u00e9taire diminuerait pour atteindre 73,8 milliards de dollars (soit 3,2 % du PIB) en 2021-2022 et qu\u2019il continuerait \u00e0 diminuer par la suite.\n\nEn outre, le DPB pr\u00e9voit qu\u2019en l\u2019absence de nouvelles d\u00e9penses, le ratio de la dette f\u00e9d\u00e9rale atteindra un sommet de 48,3 % du PIB en 2022-2023, puis qu\u2019il diminuera progressivement \u00e0 moyen terme. \n\n \u00ab Malgr\u00e9 le d\u00e9ficit record de cette ann\u00e9e et les d\u00e9ficits persistants qui suivront probablement, tant que les mesures de d\u00e9penses relatives \u00e0 la COVID-19 seront temporaires et qu\u2019il n\u2019y a pas de nouvelles d\u00e9penses, le ratio de la dette publique au PIB diminuera progressivement \u00e0 partir de son sommet, a ajout\u00e9 M. Giroux. Si l\u2019on revenait aux programmes gouvernementaux d\u2019avant la crise, selon nos perspectives \u00e9conomiques la politique budg\u00e9taire f\u00e9d\u00e9rale \u00e0 moyen terme serait viable. \u00bb","release_date":"2020-09-29T09:00:00-04:00","is_published":"2021-02-25T15:07:04-05:00","internal_id":"COM-2021-003","permalinks":{"en":{"website":"https:\/\/www.pbo-dpb.ca\/en\/blog\/news-releases--communiques-de-presse\/COM-2021-003--permanent-hit-to-the-canadian-economy-from-pandemic-and-lower-oil-prices-federal-debt-ratio-elevated-but-stable-under-current-policy--leconomie-canadienne-est-touchee-de-maniere-permanente-par-la-pandemie-et-la-chute-des-prix-du-petrole"},"fr":{"website":"https:\/\/www.pbo-dpb.ca\/fr\/blog\/news-releases--communiques-de-presse\/COM-2021-003--permanent-hit-to-the-canadian-economy-from-pandemic-and-lower-oil-prices-federal-debt-ratio-elevated-but-stable-under-current-policy--leconomie-canadienne-est-touchee-de-maniere-permanente-par-la-pandemie-et-la-chute-des-prix-du-petrole"}},"pivot":{"publication_id":36,"news_release_id":3}}
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