OTTAWA, March 28 (Xinhua) -- The Canadian government on Tuesday unveiled its 2023 federal budget with higher deficits, as economists expected a shallow recession in 2023.
The budget, titled "A Made-in-Canada Plan," showed that the federal deficit is projected to be 43 billion Canadian dollars (32 billion U.S. dollars) this fiscal year and 40.1 billion Canadian dollars (30 billion dollars) in fiscal year 2023-2024.
The cumulative budget deficits are billions of dollars higher between fiscal year 2022-2023 and 2027-2028, relative to the 2022 Fall Economic Statement. The increase results from a slowing economy and huge new spending in federal-provincial-territorial health deals, the federal dental plan and green investment.
Net new spending totals 46 billion Canadian dollars (34 billion dollars) over six years, with roughly 70 billion Canadian dollars (52 billion dollars) in gross new spending offset by 24 billion Canadian dollars (18 billion dollars) in revenue measures and expected cost savings.
However, Canada's net debt as a share of the economy is still lower than in any other Group of Seven (G7) country. Debt-to-GDP ratio falls to 42.4 percent in fiscal year 2022-2023 and is forecasted to hover around the level.
According to a recent survey conducted by the Finance Ministry, with higher interest rates, as well as slower economic growth in the United States and around the world, private sector economists expected the Canadian economy to enter a shallow recession in 2023.
With a peak-to-trough decline of just 0.4 percent, the contraction in real GDP is less severe than the 1.6 percent decline considered in the 2022 Fall Economic Statement downside scenario.
On an annual basis, real GDP growth is projected to decelerate from a strong 3.4 percent in 2022 to 0.3 percent in 2023, before rebounding to 1.5 percent in 2024.
As the economy slows, Canada's near record-low unemployment rate is expected to rise to a peak of 6.3 percent by the end of 2023, the economists predicted.
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