Canadian Growth Accelerated to 5% in the Final Quarter of 2009
Canadian Budget for Fiscal 2010-11 Tabled in the House of Commons
The second year of the federal stimulus plan is on track. Federal spending restraint will be implemented to achieve fiscal balance by fiscal 2014-15, with no tax increases planned.
The Canadian economy kicked into recovery mode in the second half of 2009, following the path blazed by the recovery in the U.S. economy. Indeed, Canadian growth accelerated to 5% in the final quarter of 2009, and that was without any contribution from the inventory cycle. The stage is set for strong Canadian growth in the first half of 2010.
With this backdrop, the Canadian Finance Minister presented the fiscal 2010-11 budget to the Canadian House of Commons on March 4. Basically, this is a “steady as she goes” budget that stays on track for the second year of stimulus measures, ranging from personal tax cuts to infrastructure spending, housing incentives, and funding for science and technology.
The budget attains fiscal balance over the next four years mainly through a freeze in spending by federal government departments. There are no tax increases.
Bottom line: The underlying assumptions are credible, and the finance ministers’ plan for medium-term fiscal stability makes a lot of sense. The Canadian dollar has been moving up lately on strong growth in Canada, and it could see further upward momentum in the second quarter of 2010 as the Canadian economy picks up speed.