FREE

Direction of Economic Policymaking In Canada Seems Clear Despite Approaching Federal Elections

With less than two weeks left in the campaign, Canada’s federal election looks too close to call. According to the CBC Poll Tracker on September 6, the Conservatives are projected to win the popular vote by a slim margin, but the Liberals are projected to hold a narrow advantage in terms of seats. Polls also suggest that neither party will win an outright majority. This adds to the uncertainty, as it could leave both the Liberals and Conservatives seeking to form a government with support from the New Democrat Party (NDP) or the Bloc Québécois. While the electoral outcome is highly uncertain, there is more certainty around the overall direction of economic policy in Canada.

Key highlights include:

- From a credit perspective, the broad contours of the economic policy proposals coming from all the main parties look fairly similar.

- Under either a Liberal or Conservative government, the overall stance of fiscal policy will be to provide targeted demand-side support until there is greater confidence that output and employment have fully recovered. Over the medium term, the election outcome is not likely to make a material difference in the pace of deficit reduction.

- On the growth front, there is a shared political focus on the need for greater investment in childcare and housing.

“In our view, the election is not likely to have a material impact on the policy outlook. Regardless of who forms the next government, fiscal policy looks set to provide targeted support to the economy in the near-term, ” notes Michael Heydt, Senior Vice President in the Global Sovereign Ratings Group. “There is a high level of uncertainty about who will be the next Prime Minister, but the overall direction of economic policymaking in Canada seems fairly clear.”