A Lakehead University Economics professor isn’t overly concerned for the time being as Canada’s deficit hovers around $252-billion to help weather the COVID-19 storm.
Livio DiMatteo says the current amount of debt compared to goods and services produced is about 12%, nothing compared to the early 90’s when it reached 70%.
“Even during the Great Depression, I think the largest deficit to GDP ratio was at about 11%. The Great Depression was quite significant in that there was something like three to four years of deficits in a row.”
DiMatteo says he expects that ratio to climb to about 50% at the end of this fiscal year.
He points out the current deficit figure is the largest in Canadian history.
“You never will be able to pay it off. If you think about it, we’ve had a federal debt for decades. The trick is to make sure that it doesn’t continue to rise as a share of GDP.”
DiMatteo predicts the federal government will likely raise taxes to climb out of the current financial hole.
