{"id":26588,"date":"2020-07-06T10:59:47","date_gmt":"2020-07-06T17:59:47","guid":{"rendered":"https:\/\/lapost.us\/?p=26588"},"modified":"2020-07-06T10:59:47","modified_gmt":"2020-07-06T17:59:47","slug":"ottawas-spending-spree-was-the-right-thing-to-do-economists-say","status":"publish","type":"post","link":"https:\/\/lapost.us\/?p=26588","title":{"rendered":"Ottawa’s Spending Spree Was the Right Thing to Do, Economists Say"},"content":{"rendered":"
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Friday, July 3, 2020 – 9:00am<\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n
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Scotiabank<\/a><\/p>\n<\/div>\n

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The federal government\u2019s massive increase in spending in response to the COVID-19 pandemic is contributing to \u201csubstantially better\u201d economic outcomes than would have been the case without those measures, while raising net debt levels only marginally over what they would have been, a new Scotiabank Economics report says.<\/p>\n

The economic impact of the pandemic on households and businesses would also have been worse without the stimulus, with unemployment reaching 15% as opposed to the anticipated 13%, the report says.<\/p>\n

\u201cCanada\u2019s decisive fiscal response to COVID-19 underpins its growth outlook,\u201d the report says. \u201cWe estimate that real GDP growth would fall by 10.3% in 2020 absent the current discretionary fiscal response. Furthermore, the recovery would be elongated by an additional year with the output gap closing only by 2023.\u201d<\/p>\n

Deficit spending undertaken in response to the crisis, at about $260 billion, or 12% of GDP, is unprecedented, the report says. During the global financial crisis of 2008-09, it was just shy of 4%. Nonetheless, it was essential to Canada\u2019s economic recovery, and will continue to be into next year.<\/p>\n

\u201cFiscal support will continue to be an important component of Canada\u2019s recovery. A deficit in the order of 5.3% of GDP next year is not only likely, but also warranted, from an economic perspective given the multi-year economic recovery ahead,\u201d say the report\u2019s authors, Ren\u00e9 Lalonde, Director, Modelling and Forecasting, and Rebekah Young, Director, Fiscal & Provincial Economics.<\/p>\n

The economists expect the federal debt as a share of GDP to peak in the first half of next year at about 47%. Debt servicing costs \u2013 interest paid on the federal debt \u2013 should level off under 2%. (In the early \u201890s, the report points out, debt levels were in the high 60s as a percentage of GDP, and debt servicing costs hovered around 6% of GDP.)<\/p>\n

\u201cFiscal policy calibrated to a highly uncertain recovery path should matter most to markets (and Canadians) at present as a premature withdrawal of support could do more harm than good,\u201d the economists say.<\/p>\n

To read the full Scotiabank Economics report, click\u00a0here.<\/a><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Friday, July 3, 2020 – 9:00am...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-26588","post","type-post","status-publish","format-standard","hentry","category-opinion"],"_links":{"self":[{"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts\/26588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=26588"}],"version-history":[{"count":1,"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts\/26588\/revisions"}],"predecessor-version":[{"id":26589,"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts\/26588\/revisions\/26589"}],"wp:attachment":[{"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=26588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=26588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=26588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}