Postponing balancing the budget to allow short-term support for the economy in Quebec does not make economic sense. That’s the view of the Institut du Québec (IdQ) which has published a report called Economic Growth and Austerity: The Truth About the Situation in Quebec. The institute’s analysis concludes that the province is able to support austerity measures and is on its way to economic recovery with a GDP forecast of 2 per cent. Unemployment is also low compared to historical trends. This would make increased government spending a bad move: “It’s a false argument to cite protecting economic growth as a reason for demanding that budgetary balance be postponed,” says IdQ research director Robert Gagné.
According to The Conference Board of Canada’s forecasts, with the expected gains in economic growth in the years to come, Quebec will reach its potential GDP—that is, its sustainable long-term level of production—in 2017. In such a context, any additional government stimulus measures could increase public debt without providing a lasting benefit to the province’s economic performance.
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