Here's a Financial Post article on how lower GDP growth is making it hard for the feds to return their budget to balance, mainly due to lower commodity prices.
"Flaherty, seeking to return the country to surpluses while ensuring the economy isn’t hurt by fiscal tightening, already scaled back revenue projections in a November budget update by $7-billion for the next fiscal year and by $36-billion over five years, citing lower commodity prices."
"In that update, growth projections for 2013 were cut to 2% from a March forecast of 2.4% when the budget for the fiscal year beginning in April was released. That 2% now looks optimistic.
Growth in 2013 will probably be closer to 1.7%, according to the median of the forecasts of economists at six Canadian banks: Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, Bank of Nova Scotia, BMO Capital Markets, Royal Bank of Canada and HSBC Canada."
How will this affect Ontario's revenues? Ontario obviously is not affected as much by high commodity prices (and considering the amount of gasoline Ontario uses and produces almost none, maybe lower commodity prices are a good thing) however low growth may spill over into Ontario. This would lower government revenues needed to balance Ontario's large deficit. GDP growth numbers for Ontario and tax revenue numbers will be critical for forecasting where the deficit is going.
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