MONTREAL, QUEBEC--(Marketwire - Jan. 17, 2013) - The Quebec economy should grow by 1.3 per cent in 2013, according to the Provincial Monitor report released today by BMO Economics.
"Fiscal restraint is ongoing, with real per-capita program spending to contract slightly over the next two fiscal years, and this coming fiscal year's budget reducing long-run capital spending targets by about $1.5 billion per year," said Robert Kavcic, Senior Economist, BMO Capital Markets. "While the overall fiscal drag in the hotly-anticipated budget was relatively modest - combined revenue and spending measures net out to about $750 million, or 0.2 per cent of GDP - there is a notable shift in the tax burden to the higher end of the income spectrum."
Employment remains volatile in Quebec, up a modest 0.7 per cent in 2012. "The jobless rate sat at 7.3 per cent in December, down from a recent high of 8.7 per cent a year earlier," noted Mr. Kavcic. "Businesses have been hesitant to hire against an uncertain financial market backdrop and cloudy political situation leading up to the September election and November budget."
"Quebec businesses continue to invest in their operations by purchasing machinery and equipment," said Mario Rigante, Vice President, Commercial Banking, Metropolitan Montreal, BMO Bank of Montreal. "With the strength of the loonie and favourable interest rate environment, now is a good time to make business investments that will strengthen productivity over the longer term."
The Province of Quebec is projecting a balanced budget in fiscal 2013-2014, ending a run of four straight years in the red. Before Generations Fund transfers (for debt reduction) and contingencies, the budget sits in a $1.4 billion surplus; positive balances are projected on this basis through the forecast horizon-though $430 million in "difference to be offset" remain.
The full Provincial Monitor can be downloaded at www.bmocm.com/economics.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $525 billion as at October 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.