FMI Ontario Chapter PD Day Business Planning and Program Evaluation October 21, 2009

2 Production in Canada and the U.S. has recently stabilized Canada and U.S. Monthly GDP trillions 2005$ Sources: Statistics Canada, Macroeconomic Advisers trillions 2002$ U.S. (left axis) Canada (right axis)

3 The labour market in Canada has weakened significantly Unemployment Rate and Employment per cent Source: Statistics Canada millions Employment (right axis) Unemployment rate (left axis)

4 Private sector forecasts suggest the Canadian economy will not fully recover – reach its potential – until 2014 Output Gap per cent of potential output Sources: Finance Canada ( ); Office of the PBO ( ) Projection 2014 Shaded areas indicate periods of recovery

5 Federal Budgetary Balances $ billions Source: July 2009 Economic and Fiscal Assessment, Office of the PBO Budgetary balance Structural balance PBO estimates suggest medium-term structural deficits -0.1

Projection 6 Federal debt ratio historically low but current fiscal structure might not be sustainable going forward Federal Debt-to-GDP Ratio per cent of nominal GDP Sources: Finance Canada; Office of the PBO : 33% Medium-term objective of 25% debt ratio first set in Budget 2004 (by ); most recent in the 2008 Economic and Fiscal Statement (by )

7 Longer-Term Policy Challenges Population ageing Climate change Productivity and structural adjustments Regional and household income disparities