If a recession hits Quebec in 2023, it will most likely be in the second half of the year, according to Quebec Finance Minister Eric Girard.
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“My [estimation] 50% is always good”, he said with a laugh, during his speech at the launch of the Tax Report of the Chair in Taxation and Public Finance, on Friday.
Quebec’s big money maker explained that the most important factor to watch for 2023 is the speed at which inflation will decline. “If inflation falls rapidly, from mid-year, we could have rate cuts, and therefore reduce this effect, which is the main source of the economic slowdown,” he noted.
But on the other hand, Mr. Girard acknowledged that the scenario of a recession in the second half of 2023 remains possible. “If the United States is not in recession in the first half of 2023, it is less likely that Canada and Quebec will be in recession, and we are moving towards the second half of 2023.”
“If in the second half of 2023 the economy slows down, rates continue to rise because inflation hasn’t come down enough, the likelihood of a recession will increase,” Girard added.
In addition, Minister Girard refuted the analysis according to which the recession would have started in Quebec at the end of the year 2022.
“The third quarter was negative due to the external sector. Consumption and investment in the third quarter, domestic demand was positive. And in the fourth quarter, the data that we have, which I admit is partial (…), is all positive,” he said.
“The contribution from housing starts is nil, but look at hours worked and jobs: up 1.3%, quarterly. And all of us who have already experienced recessions know that employment is not up 1.3% in a quarter where growth is negative,” added Mr. Girard.
pension scheme
The Minister also discussed the consultations on the Quebec pension plan which will begin in February.
Affirming that “the financial health of the Quebec pension plan is excellent”, he recalled that these consultations will be used to “ask ourselves what we want to do with this room for maneuver, which is after all weak”.
More specifically, it will be a matter of finding a way to ensure the financial security of Quebecers, whose retirement is longer than before because of the increase in life expectancy, even though their career is shorter because that they study longer and enter the labor market later than they did in the past.
Mr. Girard recalled that the CAQ proposed during the election campaign that “contributions for people who already receive their pension plan after age 65 be optional”. The Minister of Finance added that other measures are being studied to ensure the sustainability of the plan. The government also wants to recognize special situations, such as caregivers.