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  • David Boudeweel-Lefebvre

Economic update on the state of Québec's finances

As expected, the Québec government's Finance Minister, Éric Girard, presented an economic update on the state of the province’s public finances earlier today.

Québec's economy in numbers:

  • Government spending is estimated at $143.8 billion;

  • Revenues are estimated at $144.8 billion;

  • The projected deficit for 2022-2023 is up to $5.2 billion after payment to the Generations’ Fund, the province's investment fund;

  • The unemployment rate reaches 4.5% in 2022, and is expected to reach 5% in 2023;

  • The job vacancy rate is 6.2%.

Summary presentation Minister Girard confirms a slowdown in economic activity in Québec, in line with the current global trend. Thus, the Québec economy grew by 1.4% in the first quarter of 2022, and by only 0.3% in the second quarter. This greater-than-expected slowdown is explained by the rising consumer prices and interest rates, and is expected to continue in the coming months. In 2023, growth is expected to reach no more than 0.7 per cent, fuelling fears of an economic recession. The government also expects that current economic conditions, combined with the strength of the U.S. dollar, will hurt Québec exports.

The Québec government has also confirmed the implementation of its "Anti-Inflation Shield" measures promised during the last electoral campaign, with the exception of a tax cut, which will likely be introduced in the next Budget. The measures announced and confirmed (enhancement of the refundable tax credit for seniors, freezing of government rates, sending a cheque of $400 to $600 to 6.5 million Quebecers, indexation of government benefits) represent more than $13 billion in expenditures.

The economic update also contains some targeted measures, including investments of $445 million to promote housing affordability, as well as $253 million for the addition of 225 police officers and social workers, particularly in Montreal. Notably, Québec plans to join Ottawa in taxing vaping products, a measure that is expected to raise about $40 million.

Despite the economic downturn and additional spending, Québec reiterates its intention to return to a balanced budget for the 2027-2028 fiscal year. Québec's economic update does not include any tax increases for individuals or corporations.

Summary analysis

Today's economic update contains few surprises, and essentially confirms the implementation of measures promised by François Legault during the last election campaign.

Despite the Finance Minister's reassuring words, and a timid economic growth forecast for 2023, the government appears worried about a new economic slowdown or even recession, as are a growing number of economists. The Minister has repeatedly stated that the economic forecast for 2023 is uncertain. As usual, Éric Girard is playing it safe, with an alternative pessimistic scenario in his pocket in the event of a recession, and an economic risk provision of $8 billion.

The update confirms once again that government revenues will rise substantially, largely due to rising inflation. In order to fight inflation, and especially the economic slowdown, the Québec government seems to be choosing to stimulate consumption. Thus, the measures announced mainly affect the purchasing power of households. However, their real effectiveness, especially in the fight against inflation, remains to be proven.

Furthermore, the economic update has once again confirmed the extent of the labour shortage experienced by Québec businesses. Nearly 250,000 jobs remained unfilled in the second quarter of 2022, an all-time high. The pressure will be immense on the government in the coming months, especially in anticipation of the upcoming Spring Budget, to quickly put in place concrete measures to support businesses in this regard, even if a slowdown in job creation is expected in 2023.


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