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Canada sees big deficit, coy on return to surplus
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CAMBRIDGE, Ontario (Reuters) – Canada said on Thursday it would run a $50.2 billion budget deficit this year -- much larger than initially expected -- and was committed to returning to surplus, but made no mention of an earlier promise to get back in the black by 2013-14.
The government had forecast in its January budget that the 2009-10 deficit would be $33.7 billion. That figure quickly became outdated as Ottawa put more money than expected into unemployment payments and auto industry aid and was hit by a downturn in revenues.
"The government is committed to returning to a surplus in future years," said a 234-page budget update released by Prime Minister Stephen Harper on Thursday.
Harper said in a speech to introduce the update that the recession in Canada was easing and there were signs the world economy was stabilizing.
The update significantly reduced Ottawa's economic forecasts for budget planning purposes in 2009 but predicted the recession would start to fade soon.
"Looking ahead, most private sector forecasts continue to point to a sustained economic recovery beginning in the second half of 2009 and gaining momentum in 2010," it said.
However, the update also said there was "significant uncertainty" about the projections, citing what it said was the uncertain global economic outlook.
Based on a survey of private sector forecasts, Ottawa expects real gross domestic product to decline 2.5 percent for the year, versus a previously forecast 0.8 percent decline, and it expects a nominal GDP to fall 4.3 percent, compared with the previous budget assumption of a 2.7 percent decline.
The outlook also expects the unemployment rate to hit 8.6 percent, rather than the 7.5 percent the economists forecast in January.
The update said the amount of federal stimulus spending over the next two fiscal years would increase to $46.2 billion from the $40 billion projected initially.
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CAMBRIDGE, Ontario (Reuters) – Canada said on Thursday it would run a $50.2 billion budget deficit this year -- much larger than initially expected -- and was committed to returning to surplus, but made no mention of an earlier promise to get back in the black by 2013-14.
The government had forecast in its January budget that the 2009-10 deficit would be $33.7 billion. That figure quickly became outdated as Ottawa put more money than expected into unemployment payments and auto industry aid and was hit by a downturn in revenues.
"The government is committed to returning to a surplus in future years," said a 234-page budget update released by Prime Minister Stephen Harper on Thursday.
Harper said in a speech to introduce the update that the recession in Canada was easing and there were signs the world economy was stabilizing.
The update significantly reduced Ottawa's economic forecasts for budget planning purposes in 2009 but predicted the recession would start to fade soon.
"Looking ahead, most private sector forecasts continue to point to a sustained economic recovery beginning in the second half of 2009 and gaining momentum in 2010," it said.
However, the update also said there was "significant uncertainty" about the projections, citing what it said was the uncertain global economic outlook.
Based on a survey of private sector forecasts, Ottawa expects real gross domestic product to decline 2.5 percent for the year, versus a previously forecast 0.8 percent decline, and it expects a nominal GDP to fall 4.3 percent, compared with the previous budget assumption of a 2.7 percent decline.
The outlook also expects the unemployment rate to hit 8.6 percent, rather than the 7.5 percent the economists forecast in January.
The update said the amount of federal stimulus spending over the next two fiscal years would increase to $46.2 billion from the $40 billion projected initially.
