Quebec Finance Minister Eric Girard said Thursday the province’s economy is facing a lot of uncertainty going into 2023 as he presented his economic update, one that included help for low-income seniors in the face of stubborn inflation.
Girard said the risk of a recession is more apparent than ever, and he anticipates an economic slowdown for the province in 2023.
“Quebec is not in isolation. We are a small, open economy. We are part of the world economy … and the world economy is slowing,” Girard said.
“What I’m saying today is Quebec will not be spared. It’s undeniable that 2023 is a year that’s going to be more difficult than 2022.”
Economic growth is not expected to exceed 0.7% next year, compared to 3.1% for 2022. The 2022-23 provincial budget had been more optimistic, anticipating growth of 2% in 2023.
Quebec also expects job creation to slow next year, with the unemployment rate — which hit a historic low of 3.9% last April — expected to rise as high as 5% in 2023.
Girard said the deficit for the 2022-23 fiscal year will be $5.2 billion, less than the budget forecast of $6.5 billion, with a return to a balanced budget still expected in 2027-28.
Inflation has put pressure on many households but has allowed the province to reap substantial additional revenues, about $14 billion since March. In 2022-23, revenues are expected to increase by 4.3%.
Girard said the government has decided to return those funds to Quebecers, announcing a key measure Thursday to help those 70 and older by increasing a refundable tax credit to $2,000 from $411, a recurring measure that will cost the province about $8 billion over five years.
“This idea behind the assistance to the low-income seniors over the age of 70 is recognizing that few have the capacity to do more against rising cost of living,” Girard said.
More than 1.1 million seniors will benefit from the measures, nearly 400,000 more than in the past. For 2022, the tax assistance for seniors could be up to $3,100 for people living alone or $2,200 per couple.
The seniors’ credit was the only new measure announced Thursday. It is in addition to other anti-inflation measures the Legault government has taken in recent months, including limiting government fee increases and sending cheques of between $400 and $600 for Quebecers who make under $100,000 per year.
Girard, a banker by profession, said in his 30-year career he hasn’t seen inflation so high, with annual rates hitting between 6 and 7%.
Quebec is no longer ruling out a recession in 2023, which could mean a 1% decline of the economy before it rebounds in 2024. Girard said if that happens, the government has set aside $8 billion to use for supports as needed. Girard told a news conference the “most probable” scenario is weak economic growth as opposed to a recession.