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Ottawa, June 25, 2003
2003-035

Minister Manley Says Resilient Economy Poised for Upturn Later in the Year

See also:

• Speech by the Honourable John Manley, Deputy Prime Minister and Minister of Finance, to the Economic Club of Toronto (New Release 2003-034)

Despite recent economic challenges, Canada’s economy is demonstrating resilience and is poised to reap the benefits of an improvement in the global outlook in the second half of the year, John Manley, Deputy Prime Minister and Minister of Finance, stated today.

“At the midpoint of 2003, we face a challenging economic environment,” Minister Manley said in a speech at a breakfast hosted by the Economic Club of Toronto. “And it is important to remember that the problems challenging us are global in nature, although their impact is local.”

In his remarks, Minister Manley said that the full impact on the Canadian economy of the severe acute respiratory syndrome (SARS) outbreak in Toronto and the appearance of bovine spongiform encephalopathy (BSE) has yet to be completely determined. However, these factors, combined with the weaker-than-expected U.S. economy and the recent rapid increase in the value of the Canadian dollar, are expected to reduce Canada’s economic growth this year. As a result, private sector economic forecasters surveyed by the Department of Finance have lowered their 2003 growth forecast to 2.2 per cent. At the same time, forecasters expect growth to pick up in the second half of this year and into next year. As a result, they are expecting growth in 2004 to rise to 3 per cent.

“While private sector economists expect that both Canada and the United States will enjoy more modest economic growth this year than previously anticipated, they are still forecast to perform better than all other members of the G-7,” Minister Manley said. “In short, the private sector economists expect Canada to continue to be at or near the top of the G-7 again this year.”

In the area of fiscal management, Minister Manley stated that Canada continues to outperform its G-7 counterparts. Final figures for the 2002-03 fiscal year, which will be released this fall, are expected to confirm a sixth consecutive surplus.

“Once the books are closed, I expect the surplus for 2002-03 will be about equal to the $3-billion Contingency Reserve that was incorporated in the 2003 budget,” Minister Manley said. This surplus will reduce federal debt, bringing the total amount of federal debt reduction to more than $50 billion since the country’s books were balanced in
1997-98.

“We expect to balance our books again this year and next,” Minister Manley said.

The Minister said that Canada’s resilient economic and fiscal performance is the result of the hard work and commitment of its citizens, coupled with the Government’s efforts to build an economy based on sound fiscal management, low and stable inflation, freer and fairer trade, and growth and innovation. He reiterated the Government’s commitment to continue these policies in the face of an uncertain global economic outlook.

“Today our plan is working. Our will to pursue that plan remains as strong as ever,” the Minister said.

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