This report updates PBO’s September 2020 Economic and Fiscal Outlook in advance of Budget 2021.
Communications
Quotes
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The improved outlook reflects higher commodity prices, a stronger U.S. recovery and the earlier-than-expected arrival of effective vaccines. We project employment to reach its pre-pandemic level by the end of 2021 and the unemployment rate to decline steadily through 2022.
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However, the Government’s $70 to $100 billion earmark for stimulus spending and potential budget measures pose an upside risk to our economic outlook and will increase the deficit.
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Should measures in the upcoming budget translate into new permanent programs that are deficit financed, the sustainable debt-to-GDP trajectory we project over the medium- and long-term could be reversed.
Yves
Giroux
Parliamentary Budget Officer
News Release
{"id":13,"created_at":"2021-03-31T06:13:12-04:00","updated_at":"2021-03-31T08:59:04-04:00","slug":"COM-2021-013--improved-outlook-for-the-canadian-economy-heading-into-budget-2021--amelioration-des-perspectives-de-leconomie-canadienne-a-la-veille-du-budget-de-2021","title_en":"Improved outlook for the Canadian economy heading into Budget 2021","title_fr":"Am\u00e9lioration des perspectives de l\u2019\u00e9conomie canadienne \u00e0 la veille du budget de 2021","body_en":"The Parliamentary Budget Officer (PBO) today released his pre-budget outlook. The report incorporates fiscal measures announced by the federal government in its Fall Economic Statement, except for the $70-to-$100 billion earmarked for stimulus spending.\n\nBased on current policy, the PBO projects economic growth of 5.6% in 2021 and 3.7% in 2022, up by almost a full percentage point in both years compared to the September 2020 outlook.\n\nBefore any Budget 2021 measures, budgetary deficits for 2020-21 and 2021-22 would amount to $363.4 billion and $121.1 billion, respectively (or 16.5% and 5.0% of GDP). The federal debt-to-GDP ratio would rise to 49.8 per cent of GDP in 2021-22 and then gradually decline to 45.8 per cent of GDP in 2025-26.\n\n\u201cThe improved outlook reflects higher commodity prices, a stronger U.S. recovery and the earlier-than-expected arrival of effective vaccines,\u201d says PBO Yves Giroux. \u201cWe project employment to reach its pre-pandemic level by the end of 2021 and the unemployment rate to decline steadily through 2022.\u201d\n\nCompared to the PBO\u2019s pre-crisis outlook, the projected level of nominal GDP is essentially unchanged over 2022 to 2025. This rebound in the Government\u2019s tax base effectively returns budgetary revenues to their pre-pandemic path.\n\nSetting aside the Government\u2019s earmarked stimulus and potential Budget 2021 measures, the risks to the improved outlook are roughly balanced. \n\n\u201cHowever, the Government\u2019s $70 to $100 billion earmark for stimulus spending and potential budget measures pose an upside risk to our economic outlook and will increase the deficit,\u201d adds Mr. Giroux.\n\nAccording to Mr. Giroux, \u201cShould measures in the upcoming budget translate into new permanent programs that are deficit financed, the sustainable debt-to-GDP trajectory we project over the medium- and long-term could be reversed.\u201d","body_fr":"Le directeur parlementaire du budget (DPB) a publi\u00e9 ses perspectives pr\u00e9-budg\u00e9taires aujourd\u2019hui. Son rapport tient compte des mesures annonc\u00e9es dans l\u2019\u00c9nonc\u00e9 \u00e9conomique de l\u2019automne du gouvernement f\u00e9d\u00e9ral, \u00e0 l\u2019exception des 70 \u00e0 100 milliards de dollars destin\u00e9s aux d\u00e9penses de relance \u00e9conomique.\n\nEn se fondant sur les politiques actuelles, le DPB pr\u00e9voit une croissance \u00e9conomique de 5,6 % en 2021 et de 3,7 % en 2022, soit une hausse de presque un point de pourcentage complet au cours de chacune des deux ann\u00e9es par rapport aux perspectives de septembre 2020. \n\nExcluant toute mesure pr\u00e9vue dans le budget 2021, les d\u00e9ficits budg\u00e9taires pour 2020-21 et 2021-22 s\u0027\u00e9l\u00e8veraient \u00e0 363,4 milliards de dollars et 121,1 milliards de dollars, respectivement (ou 16,5 % et 5,0 % du PIB). La dette f\u00e9d\u00e9rale atteindra 49,8 % du PIB en 2021-2022, puis retombera graduellement \u00e0 45,8 % du PIB en 2025-2026.\n\n\u00ab L\u2019am\u00e9lioration des perspectives proviennent en bonne partie de la hausse du prix des mati\u00e8res premi\u00e8res, de la forte reprise \u00e9conomique aux \u00c9tats-Unis et de l\u2019arriv\u00e9e de vaccins efficaces un peu plus t\u00f4t qu\u2019initialement pr\u00e9vu, a affirm\u00e9 le DPB Yves Giroux. Nous nous attendons \u00e0 ce que le niveau d\u2019emploi regagne le terrain perdu depuis le d\u00e9but de la pand\u00e9mie d\u2019ici la fin de 2021, et que le taux de ch\u00f4mage diminue de fa\u00e7on constante jusqu\u2019en 2022. \u00bb\n\nSelon les pr\u00e9visions du DPB, le niveau du PIB nominal retournera ra au niveau des projections pr\u00e9-pand\u00e9mie de 2022 \u00e0 2025. La remont\u00e9e de l\u2019assiette fiscale du gouvernement se traduira dans les faits par un retour des recettes budg\u00e9taires \u00e0 leur trajectoire pr\u00e9-pand\u00e9mique.\n\nSi l\u0027on met de c\u00f4t\u00e9 les mesures de relance et les mesures que pourrait contenir le budget de 2021, les risques pour les perspectives am\u00e9lior\u00e9es sont relativement \u00e9quilibr\u00e9s. \n\u00ab Toutefois, l\u2019affectation des 70 \u00e0 100 milliards de dollars que le gouvernement pr\u00e9voit au programme de relance et les mesures budg\u00e9taires que pourrait contenir le budget repr\u00e9sentent un risque \u00e0 la hausse pour nos perspectives \u00e9conomiques et augmenteront le d\u00e9ficit \u00bb, note M. Giroux.\n\nSelon M. Giroux : \u00ab Si les mesures budg\u00e9taires se traduisent par de nouveaux programmes permanents financ\u00e9s par un d\u00e9ficit, la trajectoire viable de la dette par rapport au PIB que nous pr\u00e9voyons \u00e0 moyen et \u00e0 long terme pourrait \u00eatre invers\u00e9e. \u00bb","release_date":"2021-03-31T09:00:00-04:00","is_published":"2021-03-31T08:59:04-04:00","internal_id":"COM-2021-013","permalinks":{"en":{"website":"https:\/\/www.pbo-dpb.ca\/en\/blog\/news-releases--communiques-de-presse\/COM-2021-013--improved-outlook-for-the-canadian-economy-heading-into-budget-2021--amelioration-des-perspectives-de-leconomie-canadienne-a-la-veille-du-budget-de-2021"},"fr":{"website":"https:\/\/www.pbo-dpb.ca\/fr\/blog\/news-releases--communiques-de-presse\/COM-2021-013--improved-outlook-for-the-canadian-economy-heading-into-budget-2021--amelioration-des-perspectives-de-leconomie-canadienne-a-la-veille-du-budget-de-2021"}},"pivot":{"publication_id":93,"news_release_id":13}}
