Finance Minister Jim Flaherty speaks to reporters after meeting with private-sector economists in Ottawa on Feb. 1, 2011.Sean Kilpatrick/The Canadian Press
Canada's recovery got a vote of confidence from a group of leading private-sector economists Tuesday, but Finance Minister Jim Flaherty was careful to stress that growth won't be quick enough to put a significant dent in unemployment.
The labour market is intensifying as a political issue, with the Harper government resisting calls to cancel the last phase of corporate tax cuts, saying the measure helps create jobs over the long term. Opposition parties, meanwhile, cite government reports showing there are more effective ways for Ottawa to boost employment, and argue the focus should be on creating jobs now.
In a December survey released Tuesday, the economists Mr. Flaherty consults as he prepares his fiscal projections trimmed their average growth forecast for 2011 by just 0.1 of a percentage point, to 2.4 per cent, from September and left their calls for the next four years unchanged.
As a result, the economists continue to say that Canadian growth from 2010 to 2015 will average 2.7 per cent, upholding a key assumption built into the Harper government's claim that it can balance Ottawa's books by 2015.
But even with an improving outlook for the United States - Canada's main export market - the economists didn't tweak their September forecast for a 7.7-per-cent Canadian jobless rate in 2011 and barely cut their 2012 prediction. The rate will average 7 per cent or higher through 2013, compared with 7.6 per cent now, before improving to 6.6 per cent by 2015.
"We anticipate some modest improvement, as the private-sector forecasters do, in unemployment, but we also anticipate resistance to the unemployment rate coming down,'' Mr. Flaherty told reporters after releasing the new forecasts.
Economists at the meeting said their December projections may not have fully captured the likely jolt that the crucial U.S. recovery will get from a tax-cut package that President Barack Obama and Republicans in Congress agreed to late last year, which is widely expected to boost Canada, too. Mr. Flaherty's comments, though, suggest the Harper government is trying to manage expectations ahead of a possible election campaign.
Meanwhile, Finance Canada's monthly tracking of revenues and expenses suggests the deficit for the current fiscal year ending March 31 is on track to come in lower than the $45.4-billion estimated in October.
Bill Curry