Despite coronavirus fears shocking the world economy and uncertainty in Canada from weeks of ongoing rail blockades, the Liberals still prepare to release their 2020 budget on schedule.
According to Liberal Finance Minister Bill Morneau, Canada has a “strong fiscal position” despite the wide-spread turbulence caused by the virus.
“I think what people need to know is that, you know, we have a strong fiscal position, so we’re prepared in terms of the actual health risks, but we’ve a strong position fiscally so that we can actually take measures as needed as the facts come out,” said Morneau.
The Conservatives have urged the Liberal government to cut spending ahead of its budget announcement. Conservative finance critic Pierre Poilievere disagreed with Morneau’s optimism, claiming the national economy is vulnerable to an upset.
In their latest fiscal update, the Liberals announced a deficit of $26.6 billion for 2019, exceeding spending predictions by several billion. According to Morneau, the government is projecting an even higher deficit for 2020, weighing in at $28.1 billion.
“Justin Trudeau is setting the stage for a made-in-Canada recession,” aid Poilievre in a statement on the update. “The debt-to-GDP ratio is rising, the deficit is $7 billion higher than Liberals promised only months ago and there is no date for a balanced budget.”
Morneau expressed similar optimism about the state of the economy after the deficit announcement, disagreeing with Poilievre’s assessment of the situation.
“I think it’s a little bit irresponsible of the Conservatives to be making people more anxious,” said Morneau.
However, a January Scotiabank report on Canada’s wholesale sector put a dent in Morneau’s claims revealing that wholesale sales for the fourth quarter of 2019 fell to -0.29%, far lower than the predicted 1.3% growth.
“Wholesale revenue for November is just the latest in the string of negative data releases that underscored the slowdown of the Canadian economy at the end of 2019. With this report, Q4-2019 is reduced to -0.29% Q/Q SAAR, far below the BoC’s somewhat stale forecast of 1.3%,” read the report.
Much like the Nasdaq and New York exchanges, the Canadian stock market has been plummeting in response to the virus. On Monday morning the TSX declined 10%, about 1,600 points, in a period of minutes, triggering automatic trading halts. The decline was the worst on record since 1987.