“The budget deficit would reach $256.0 billion [$188.22 billion USD] in 2020-21. Relative to the size of the Canadian economy, the deficit would be 11.8 percent of GDP in 2020-21,” the report said on Thursday. “As a share of the economy, this would be the largest budgetary deficit on record (since the beginning of the series in 1966-67) and sit well above the record of 8.0 percent of GDP observed in 1984-85.”
The parliamentary budget watchdog did correct anticipated real GDP decline for the upcoming fiscal year, now projecting that the GDP will contract by 6.8 percent – half of the 13.5 percent decline it had predicted in April on the strength of better-than-expected economic results in April and May.
However, the PBO now predicts that it will take employment even longer to recover than previously thought. By the fourth quarter of 2020, the PBO projects that only 56.5 percent of the population aged 15 years and older will be employed, in contrast to the 57.8 it had projected in April. In February, prior to the onset of the pandemic, the employment rate stood at 61.8 percent.
The numbers could still rise given that certain relief programs, including the Canada Emergency Response Benefit (CERB) program - a $1,400 benefit for workers who have had their income streams affected by the COVID-19 pandemic – are being extended for the foreseeable future.