Justin Trudeau unseats Stephen Harper as Canadian Prime Minister: What does this mean for the economy?
After nearly a decade in power, voter discontent and a sluggish economy spurred Canada’s voters to unseat Conservative Stephen Harper in favor of the Liberal Party’s Justin Trudeau in Canada’s October 19th National Election. Trudeau’s Liberal Party also secured the first liberal majority in 15 years, taking 187 of the 338 districts across the country.
Trudeau, son of long-time Prime Minister Pierre Trudeau, was elected on a promise of change and “A New Plan for a Strong Middle Class.” He plans to stimulate the economy by running C$10 billion annual budget deficits for three years, largely to invest in infrastructure and renewable energy. This is in sharp contrast to Harper’s focus on balancing the budget and running a surplus.
Trudeau’s campaign also promises to focus on increasing taxes on top earners while cutting taxes for the middle class. He intends to enhance existing tax measures aimed at making Canada a leading jurisdiction for investments in research, development, and clean technology manufacturing. Plans are to leave the federal corporate tax rate unchanged at 15 percent.
So how is the economy reacting to this change? The Canadian dollar gained slightly against the USD the day after the election and then fell to near three-year lows the following week. The Bank of Canada left interest rates unchanged on October 21st while slightly decreasing growth forecasts. Both the economy and the currency continue to be significantly impacted by weak oil prices.