Chrystia Freeland will present its economic update on November 3

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Chrystia Freeland will present its economic update on November 3

Federal Finance Minister Chrystia Freeland

Federal Finance Minister Chrystia Freeland will provide an update on public finances and the state of the Canadian economy on November 3 as Ottawa prepares for a downturn. /p>

In this fall economic statement, which will be tabled in the Commons on Thursday, the federal government will also share its outlook for an economy facing runaway inflation – and perhaps even a recession in the coming months.

Minister Freeland has pointed out in recent weeks that the Liberal government is focused on fiscal discipline so as not to fuel further inflation which has affected the cost of living, including grocery bills.

Canada's annual inflation rate slowed somewhat in September to 6.9%, thanks in part to lower gasoline prices, but the cost of groceries continued to rise.

Randall Bartlett, senior director Canadian economy at Desjardins, expects the government to deliver on its commitment to fiscal discipline, given the current economic climate.

“I don't think the federal government wants to fight the Bank of Canada by putting in place measures that will increase inflation.

— Randall Bartlett, Senior Director Canadian Economy at Desjardins

The Bank of Canada is battling inflation not seen in decades with aggressive interest rate hikes since March. It raised interest rates again this week, for the sixth time this year: the half-point hike takes its key rate to 3.75%.

In its latest monetary policy report, the Bank of Canada revised its economic outlook, which now takes into account a significant slowdown.

The central bank now expects economic growth to stagnate by the end of this year and into the first two quarters of 2023, with growth between zero and 0.5%, before slowing down. gain traction in the second half of next year. She adds, however, that a slight contraction is just as possible.

Robert Asselin, senior vice-president of the Business Council of Canada, says fiscal discipline is especially important as Canada faces high inflation, rising interest rates and weak economic growth. /p>

The focus should now be on fiscal prudence to ensure the central bank can bring inflation back within its target range, Mr. Asselin.

Desjardins forecasts the federal deficit to reach about $20 billion by year-end, but Bartlett said that estimate does not include any spending that may be announced in the government's economic statement. #x27;fall.

Monthly updates from the Department of Finance showed that federal public finances have improved as tax revenues have increased and related budgetary expenditures to the pandemic have decreased.

In the first five months of fiscal year 2022-23, the federal government posted a surplus of $3.9 billion, compared to a deficit of $57.2 billion recorded for the same period last year. last year.

Bartlett says federal finances have improved more than expected due to labor shortages in Canada, which are driving up wages, but also because of high corporate profits and inflation, which drive up tax revenues.

In last spring's budget, the Liberal government essentially wanted to help Canadians struggling with runaway inflation and boost Canadian productivity.

The economic statement is also expected to next week outlines how Ottawa intends to respond to the US Inflation Reduction Act, afi n to remain competitive when it comes to attracting investment in the green energy sector.

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