Stronger economic growth to boost feds’ bottom line by billions: experts

Firmer growth to improve feds' bottom line

OTTAWA — If economic growth surges in line with the Bank of Canada’s latest predictions, experts say the feds will enjoy a multibillion-dollar bump on their balance sheet.

After several months of surprisingly strong economic data, the central bank raised its 2017 growth projection this week to 2.6 per cent, up from its January call of 2.1 per cent.

In comparison, the federal government released a budget last month that based its fiscal numbers on a growth forecast for this year of 1.9 per cent — a number that came from a December survey of private-sector forecasters.

The chief economist for a University of Ottawa think tank says a rough estimate suggests the difference would add between $1.5 billion and $2 billion to the federal bottom line over each of the next three years, starting in 2017.

Randall Bartlett of the Institute of Fiscal Studies and Democracy says the central bank’s prediction for this year is in line with updated market expectations and the boost would provide Ottawa with more revenue over the next three years.

The Trudeau government’s budget predicted a shortfall this year of $28.5 billion, including a $3-billion reserve set aside for emergencies. The feds also projected deficits of $27.4 billion in 2018-19 and $23.4 billion in 2019-20.

The Canadian Press

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