The federal budget tabled Tuesday and the economic outlook allow us to hope for several years of improvement for the Canadian economy, foresees the founder of the financial management company Fiera Capital.
“We are perhaps, potentially, at the start of an economic cycle which can last five, six or seven years, which is a growth cycle with an inflation rate under control,” said Jean-Guy Desjardins, president of the board and global CEO of Fiera Capital, in an interview on LCN Wednesday evening.
Two elements combine to provide a glimpse of this radiant future.
“In the short term, the budget is stimulative, that is to say it will help stimulate economic growth in Canada. […] We should see that in a positive light,” analyzed Mr. Desjardins, who does not fear that the tens of billions of dollars in deficit will fuel inflation.
As a bonus, economic conditions suggest a return of the Bank of Canada’s key rate, currently set at 5%, towards the 3.25% or 3% mark over the next year and a half.
Productivity
On the other hand, Mr. Desjardins has a caveat on the government’s announcement that it will tax capital gains exceeding $250,000, a measure that risks harming the improvement of productivity.
“Taxing capital is never a good thing. For us in Canada, this is particularly not a good thing because we have a productivity problem in the Canadian economy. We have a productivity rate that is below that of the Americans with whom we are in competition. We need to have capital and investments in new factories, technologies, modern equipment,” explained the director of Fiera Capital.
So, in his opinion, it would have been better for Ottawa to seek to reduce its spending, rather than relying on this new tax to draft its budget.
“Real enrichment comes from productivity,” summarized Mr. Desjardins.
