2023-10-03 04:00:00
The economic slowdown is seriously starting to be felt in Quebec. This explains why the Minister of Finance Eric Girard has just revised downwards his revenues for the current financial year, that of 2023-2024.
The Legault government’s financier has reduced his revenue forecasts by around a billion dollars. Two sources of income are particularly affected.
This includes a $650 million reduction in revenue from government enterprises. Instead of collecting 6.8 billion, the minister instead expects 6.15 billion, which represents a decrease of 6.7%. The bulk of this drop in revenue is attributable to Hydro-Québec due to the decrease in exports.
The other main source of revenue revised downward is that of “corporate taxes”, where a reduction of $310 million is anticipated. We are talking here about a drop of barely 2.7%.
I find that Minister Eric Girard is showing optimism here compared to the results recorded during the first quarter, where the drop in revenue from corporate taxes amounted to $524 million over just three months, or 16. 4%!
Listen to the economy segment with Michel Girard via QUB radio :
I don’t want to play the prophet of doom. But let’s agree that the net profits of companies are likely to fall significantly due to the sharp increase in the cost of borrowing and also the increase in wages. Falling profits mean falling taxes.
Despite his downward revision of a billion dollars in revenues, the financier of the CAQ government believes that he will succeed in closing the present financial year with the same deficit as expected, i.e. $1.67 billion before transfer of money to the Generations Fund. And this, without even cutting its spending forecasts.
By what miracle did he achieve this feat? It simply reduced its “contingency provisions” by a billion dollars, which at the start of the year stood at 1.5 billion.
Including payments of revenues dedicated to the Generations Fund, the budget deficit will reach $4 billion this year.
Photo Stevens LeBlanc
SLOWDOWN
Like the entire Canadian economy, the Quebec economy has slowed since the start of 2023. After growing by 0.3% in the first quarter, real GDP contracted by 0. .5% in the second quarter.
This slowdown coincides with monetary tightening by the Bank of Canada, which aims to curb the inflationary surge.
But Minister Girard remains optimistic. “The actions taken to date by the Bank of Canada are bearing fruit. Price growth is slowing. Despite this moderation, the rise in wages and the high level of prices support household spending. »
That said, the Desjardins economic studies department has serious reservations about the health of our economy.
“While the Canadian economy has just started to show some signs of slowing down, that of Quebec has been going through a period of weakness for several months. Our scenario assumes a period of contraction in real GDP which is expected to last until early 2024.”
Oops, a little cold shower with that.
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