Canada PM Warned for Second Wave of Pandemic and Increased Government Spending

Canadian Prime Minister (PM) Justin Trudeau said on Wednesday, September 23, 2020, warned his people to follow public health guidelines and various measures since the country witnessed a second wave of the coronavirus pandemic. An Abacus Data poll showed that Canadians are now more worried about COVID-19 than what had happened after the virus outbreak hit the country in April.

Besides this, the Trudeau government announced to increase spending measures, which set to fight adverse impacts on the country’s economy as well as recover more than a million jobs. Analysts explained that the policy for increasing spending was a risky move since it might further escalate the existing fiscal deficits of the country. However, the government made no specific spending commitments or fiscal projections and some sources reported that the final details of the budget update would be disclosed later this year.

According to the government data until Wednesday, Canada recorded a total COVID-19 infection of 147,753 cases with a death toll of 9,243 people. Meanwhile, the Canadian dollar extended its decline after the PM speech, touching 1.3384 to the United States (US) Dollar or 74.72 US cents.

Second Wave of Pandemic in Canada

With the rapid surge of the COVID-19 cases in Canada over recent weeks, Trudeau said in his national address that the country “is at a crossroads” as a second wave hit its four large provinces. He added, “We’re on the brink of a fall that could be much worse than the spring,” as the data showed that the country witnessed a rise of an average of 1,123 new cases reported daily over the past week, compared with a daily average of 380 cases in mid-August.

Stating that the government would do all necessary measures to fight the pandemic, Trudeau added, “We have the power to get this second wave under control. I know we can do it because we’ve already done it once before.” Earlier, the government made the commitments in the so-called Speech from the Throne, which laid out its agenda and promised to recover more than a million jobs lost during the crisis. “This is not the time for austerity,” the government said in the speech, “Canada entered this crisis in the best fiscal position of its peers.”

Canada’s Fiscal Deficits

In his address, Trudeau sought plans to increase the government spending to fight the pandemic and stressed that Ottawa could afford the promised spending. As analysts suggested that the move could lead to soaring budget deficits and the increase in spending measures would mean Canada’s budget deficit this fiscal year is expected to hit C$343.2 billion ($256.5 billion), the largest since World War Two.

Ian Lee, associate professor of management at Ottawa’s Carleton University said Trudeau’s speech was a “very high-risk bet” adding, “he’s gambling this massive increase in expenditures is going to generate very substantial growth.”

Meanwhile, the left-leaning New Democratic Party indicated to support Trudeau’s proposal but mentioned that the proposals did not offer enough support to Canadians. However, the Conservatives, the largest opposition group, confirmed expectations they would not back the government.