Canada’s budget watchdog says slower growth will sap about $22 billion annually from the country’s economy.
Parliamentary Budget Officer Kevin Page says in a new report that he anticipates economic growth will brake to an annual rate of 1.6 per cent in the second half of this year, after slowing to 1.8 per cent in the first half.
He’s not much more optimistic going forward, forecasting tepid growth rates of 1.5 per cent in 2013 and two per cent in 2014.
That’s at the bottom of most economic forecasts and well below the Bank of Canada’s projections of growth rates of 2.2 per cent in 2012 and 2.3 and 2.4 per cent in the two years after that.
The PBO says the removal of government stimulus has robbed about one percentage point of growth from the economy.
At the weaker levels, the PBO says Canada’s nominal gross domestic product — from which Ottawa derives tax revenues — will be $22 billion lower annually.
The new forecasts have not wildly thrown Ottawa off track on its plans to return to balance, Page says, because of federal government spending restraints.
Page said Ottawa still has a 60 per cent probability of balancing the budget when it said it would in 2015-16.
Under his analysis, Page said Ottawa will go from an $18.1-billion deficit this fiscal year to a $13.8-billion surplus in five years.