Resources are available, but they must be cautious.
Canada's Finance Minister Chrystia Freeland has stated that she would proceed cautiously in the upcoming budget and would not prevent the central bank from fighting inflation, which was almost three times higher than the 2% target in the beginning of the year. This takes into account the possibility of a recession, which could reduce stable tax revenues, and the cost of loans must also be kept in mind. The transition to green investments is a critical area for the country. Many experts argue that Canada should be doing much more because it has the potential to become a leader in this area. According to Randall Bartlett, Director of Canadian Economics at Dejardins, investing in the transition to green economy should provide certainty. Rebekah Young, head of economic crisis protection at Scotiabank, says that at this stage of the business cycle, saving is a better option unless spending is essential. She expects the debt-to-GDP ratio to remain flat and the government is likely to build up a reserve in case future economic surprises, such as pandemics, which could threaten positive economic growth.
Canada's potential is high
Canada could spend an additional CAD 20 billion (approx. USD 14.8 billion) annually on the green economy. This would keep the net debt-to-GDP ratio below 45.5% in 2021/2022, what would represent the best results among the G7. Flavio Volpe, president of the Automotive Components Manufacturers Association, says that every automaker in North America (there are 15 major ones) should electrify by 2030. Each will purchase batteries from processing plants that don't exist yet.
Canada's investment in the green transition is a matter of getting the balance right, requiring consideration of many factors, such as the state of the economy, the cost of loans, and the need to remain competitive with the United States of America. Overall, the provision for these investments could be 7.5 to 10 billion CAD. The estimates also include new spending on health care over the next decade, which was announced in early February and amounts to CAD $46.2 billion (approximately USD 33.9 billion).
Olivia Lacenova, analyst at Wonderinterest Trading Lt
