{"id":611,"date":"2020-07-08T22:33:09","date_gmt":"2020-07-08T22:33:09","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/2020\/07\/08\/costly-covid-stimulus-loads-343-billion-onto-2020-deficit\/"},"modified":"2020-07-08T22:33:09","modified_gmt":"2020-07-08T22:33:09","slug":"costly-covid-stimulus-loads-343-billion-onto-2020-deficit","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/canadian-analysis\/provincial-and-fiscal-outlooks\/budget-analysis\/costly-covid-stimulus-loads-343-billion-onto-2020-deficit\/","title":{"rendered":"Costly Covid Stimulus Loads $343 Billion onto 2020 Deficit"},"content":{"rendered":"

Finance Minister Bill Morneau has estimated the deficit for FY 2020\/21 at $343 billion \u2013 a figure that eclipses even the lofty forecast<\/a> we made on Monday. Indeed, today’s fiscal update acknowledged that any material worsening of the virus outlook will pose a significant risk to the government’s bottom line. It also left the door open for more recovery spending even after the virus is contained, to help manage the longer-term consequences of the crisis.<\/p>\n

Falling revenue, rising costs paint a much darker economic and fiscal picture <\/h4>\n

Ottawa’s projections envision a more severe economic downturn this year compared to our snapshot. Averaging several forecasters’ numbers, the government expects GDP to plunge 6.8% in 2020, before recovering 5.5% in 2021. <\/p>\n

Morneau’s \u201cfiscal snapshot” included updated costs for the emergency wage subsidy, pegging the extended program at $82 billion. This new estimate adds over $35 billion to the costs of recent government actions, though given slow uptake of the wage subsidy thus far, may overshoot. Overall, the stimulus measures announced total nearly $230 billion this year. <\/p>\n

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