Photo: Valérian Mazataud The Duty
Quebec’s economy will suffer this year, a decline of 5%, within a range of -4 to -6%, depending on what was indicated on Friday the minister of Finance, Eric Girard, during a presentation organized by the BTMM.
After lying 23 billion in various measures of stimulation since the beginning of the pandemic, the government of Quebec will be better prepared to face a second wave of COVID-19 and he will have to go into debt again if this one was stronger than the first, indicated on Friday the minister of Finance, Eric Girard.
Quebec’s economy will suffer this year, a decline of 5 %, within a range of -4 to -6 %, according to what was stated by Mr. Girard during a presentation organised by the Chamber of commerce of metropolitan Montreal (BTMM). This contraction, along with a deficit of 12 to 15 billion (after contributions to the generations Fund), reflects the collapse in activity in the first half of the year followed by a possible rebound in the second half.
“We closed 40 % of the economy of Québec for a period of approximately eight weeks. Each month costs us 3 % of GDP and about 5 billion of public finances, ” said Mr. Girard. At a time when the federal government tabled its budget on march 10, it was predicted for 2020 a gross domestic product growth of 2 % in response to the surge of 2.8% in 2019.
The dashboard on the evolution of the coronavirus in Quebec, in Canada and in the world
The forecast of a 5% decline in GDP turns out to be more optimistic than that of some financial institutions, including Desjardins group, which table instead of on a drop of 6.9 %. He believes that the economy will grow by 5.7 % by 2021, compared to 5.2 % in Ontario and across Canada.
Invited by the president of the BTMM to tell if there is a limit to what the government can invest in order to face the crisis and support the economy, Mr. Girard has said that ” it is very much in function of the situation in public health “. “If there is a second wave, we will be better prepared. But it is possible that it is stronger. There is a risk. The role of a government is to help its citizens, and to help its businesses. Yes, there will be more debt if the second wave is more important than the first. “
Horizon of a year and a half
Many economists argue that the reboot of gradual economies will lead to a marked resurgence of activity in 2021. “If we could find back in December 2021 the level of GDP that we had in December 2019, this would be a great success “, said the minister, stating that this would occur “if the rebound in 2021 and the second half allows us to recover what has been lost” after having placed the economy of Quebec on break from the end of the month of march. “Of course, there are sectors that are going to have an impact over much longer periods of time, such as retail, tourism, aviation, catering, hospitality. They will know the return periods much longer long, and they need your help. “
Each month [of containment] costs us 3 % of GDP and about 5 billion of public finances
— Eric Girard
The government Legault has decided to pre-empt some of the expenses to support the quebec economy, the envelope of the québec infrastructures Plan for 2020 has been raised from $ 11 billion to $ 13.9 billion two weeks ago. About one-quarter of the additional sum ($700 million) should go to the network of health and social services, while $ 1.1 billion was allocated to the education infrastructure.
The crisis has highlighted some of the “vulnerabilities” of Quebec, believes the minister. In addition to the demographic issues with the ageing of the population, which leads in particular to the impact on the labour market and public finances, Québec must continue to improve its productivity and will need to redouble its efforts to find the path to a balanced budget in order to continue the decrease in the weight of its debt relative to the size of its economy. “This path will take three to five years. I can already give some guidelines : there will be no tax increase. “The reduction of the school tax remains, he said. “The return to a balanced budget goes through a growth revenue which will be slightly higher than the expenditure. That is the game plan. “
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