IMF gives Trudeau government passing grade, but warns of longer term challenges

July 14, 2017

The International Monetary Fund has given the Trudeau government a passing mark for its handling of the economy since coming to power, but warns that “more difficult challenges lie ahead.”

The comments are contained in an annual report released by the Washington-based organization [on July 13, 2017] that credited the Liberals with helping the Canadian economy regain momentum. 

“To support the economy, the government introduced tax cuts for the middle class, expanded family benefits, and raised infrastructure spending,” the report said.

The billions of dollars in additional spending combined with the Bank of Canada’s historically low interest rates, “has succeeded in revitalizing the economy after a tough year in 2015,” the report said...

Yet the IMF also raised alarm bells about the amount of uncertainty in Washington, and its potential impact on Canada’s economy over the long term.

Among the issues was whether the Trump administration would significantly cut corporate taxes, which would make Canada less attractive to investors, and the future of NAFTA.

The IMF also cited major concerns about Canada’s housing market, warning that any sudden decline in prices could send shock waves across the country...

There were also worries about the impact of further oil price declines.

One of the IMF’s prescriptions for maintaining the economy’s momentum was to keep interest rates low...

The report also advised the federal government to continue with its plan to invest billions more on infrastructure over the next decade, though it said the deficit should start to come down next year...

This is excerpted from 13 July 2017 edition of The Star.


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