The Minister of Finance Releases the Economic and Financial Update The Minister of Finance, Minister of
Government Services, Minister responsible for Government Administration and
Chair of the Conseil du tresor, Monique Jerôme-Forget, today released the
annual economic and financial update. In doing so she also announced that the
government's budget would be balanced in 2008-2009 and 2009-2010 and unveiled
a series of measures to deal with the economic situation.
"Three years ago, our government took the initiative of providing an
update, in the fall of each year, on Quebec's economic and financial
situation. This year, this exercise in transparency takes on a special
character in view of the economic situation our neighbours and other countries
throughout the world are experiencing. However, I want to reassure Quebecers
as to the real situation and the measures the government has taken to deal
with it," the Minister said.
Economic outlook: difficult international context
Quebec is one of the most open economies of the world. Exports account
for 50% of its gross domestic product and 75% of its international exports are
sent to the United States. Accordingly, Quebec is directly affected by the
severe international economic slowdown. Indeed, growth in the industrialized
countries will be down sharply this year and next. From 2% to 3% in 2007, it
will decline to roughly 1% this year and to less than 1% in 2009. However, the
Minister pointed out that Quebec was well prepared to deal with this slowdown
and that economic activity has continued to grow in Quebec since the beginning
of 2008.
Economic growth in Quebec
"Looking at the main economic indicators, we can see that Quebec has
reacted well to the turbulence sweeping the globe. Over the past years and
months, we have taken a series of measures that enable us to deal with the
current economic slowdown," the Minister stated.
While Quebec must deal with a drop in its exports, domestic demand should
be sufficient to offset this decline and keep Quebec's economy growing.
Accordingly, forecast real GDP growth is adjusted to 0.8% for 2008 and 0.6%
for 2009.
Major investments in repairing public infrastructures and in energy
development, tax cuts of more than $1 billion for households, the elimination
of the capital tax, in 2008, for manufacturers, and in 2011 for other
companies, as well as the introduction of an investment tax credit for
businesses are all measures that support growth in domestic demand. "Our
measures are part of a plan that has been hailed by economists. They account
for the good performance of Quebec's economy despite the difficult
international context," the Minister pointed out.
Business investment
The Minister mentioned that business investment will continue to grow in
2008 and 2009. A number of large-scale projects are in progress or will start
in the near future in Quebec's regions. "If companies like Alcoa, Ultramar,
Rio Tinto Alcan and Pratt & Whitney continue to invest here in major projects
that, in some cases, exceed a billion dollars, it is surely because they are
confident in the soundness of our economy," the Minister of Finance said.
Preparing for the economic recovery
"I am not here to tell Quebecers that everything is just fine. The
economic slowdown is real and the global financial crisis is cause for
concern. But I want to reassure everyone that we are monitoring the situation
very closely and that Quebec has never been so well prepared to deal with a
slowdown," the Minister stated.
"Our commitments are simple and concrete. We will keep the budget
balanced, support families' purchasing power, protect Quebecers' jobs,
mitigate the effects of tighter credit on businesses and accelerate the pace
of public investments that generate economic activity, wealth and employment
in every region of Quebec. We have every reason to look ahead to Quebec's
economic future with confidence and optimism." the Minister concluded.
Source: Quebec Department of Finance
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