In the coming years, Canada will face two interrelated global economic shifts: first, the accelerating global race to build net-zero economies and the industries of tomorrow.
Second, a realignment of global trade patterns as democracies move to strengthen their economies by limiting their strategic economic dependence on countries such as Russia and China, according to the Canadian government.
Canada’s real gross domestic product (GDP) growth is forecast to slow from 3.4% in 2022 to 0.3% in 2023, before rebounding to 1.5% in 2024.
While the above two global shifts represent important economic opportunities for Canadian workers and businesses, significant investment will be required to capitalize on them, from both the private and public sectors.
To support this, Budget 2023 takes substantial steps to mobilize private investment in building Canada’s clean economy.
The goal of these investments is to increase Canada’s economic capacity in the industries of the future, build good careers and usher in a new generation of prosperity for all Canadians, while reducing Canada’s emissions and strengthening its essential trade relationships.
Moreover, at a time of high global inflation, investing in Canada’s long-term prosperity must be balanced against the need to avoid exacerbating inflation.
Net-zero economies
In this context, the Canadian government is taking a responsible and balanced approach to fiscal management: supporting the most vulnerable Canadians, strengthening its public health care system and investing in Canada’s future prosperity, while preserving the country’s long-term fiscal sustainability.
Canada’s fiscal position -the lowest net debt and deficit in the G7 as a percentage of GDP- means the country can afford to make these essential investments.
Thus, in 2022, Canadian economic growth remained strong, driven by the positive effect of the relaxation of health restrictions and high commodity prices, especially energy.
However, the effects of inflation and rapidly rising interest rates began to be felt towards the end of the year and are expected to continue to dampen activity in 2023.
