LONDON, Ont. — Canada's red-hot economy is indeed likely to slow down this year, making federal investments in boosting economic growth and job creation all the more important, Finance Minister Bill Morneau said Friday.
As the federal Liberal cabinet prepared for a second day of meetings at its retreat in London, Ont., Morneau stopped to sing the praises of his government's economic agenda, which he credits for the economy's super-charged performance over the last year.
"The economy has performed exceptionally well in 2017," he said. "The kinds of things we've done to help Canadian families has a had a real difference on our economy."
Among other things, unemployment fell to 5.7 per cent in December, the lowest figure since comparable data became available in January 1976.
In his fall fiscal update in October, the minister predicted the economy would grow 3.1 per cent for 2017 as a whole.
That strong growth rate won't be matched this year, however, Morneau conceded.
In its own latest forecast, Scotiabank is predicting growth of just 2.3 per cent this year, while TD Bank's most recent prediction says Canada's on pace for 2018 growth of around 2.4 per cent. Both also agree the rate will slow down even further in 2019.
Morneau said the government recognizes the importance of being fiscally responsible and remains committed to reducing annual deficits over the long term.
In his fall update, Morneau projected a deficit of $19.9 billion in the 2017-18 fiscal year — almost $9 billion less than predicted in his budget last spring.
He also projected that the deficit would drop over the next five years, to $12.5 billion in 2022-23.
This year's deficit projection includes $1.5 billion for "risk adjustment" — a figure that might be increased going forward to account for additional risks to the economy, such as the potential demise of the North American Free Trade Agreement.
"We're continuing to work on our budget 2018 and one of the things we will consider is the appropriate consideration of risk, as we've done in previous times," Morneau said Friday.
However, he acknowledged economic growth will be "more modest" this year.
"We're always facing challenges. We face long-term demographic challenges, we face global risks that might impact global growth. So we need to be focused on how we can continue to encourage growth in our economy."