Recession over, says International Monetary Fund

OTTAWA — The International Monetary Fund is declaring the worst global recession since the Second World War over, but warns that the recovery will be sluggish and hard choices — including higher taxes — will be necessary to sustain the economic rebound.

OTTAWA — The International Monetary Fund is declaring the worst global recession since the Second World War over, but warns that the recovery will be sluggish and hard choices — including higher taxes — will be necessary to sustain the economic rebound.

In an article to be published Wednesday, the international financing agency’s chief economist says the recession has drained government treasuries to such an extent that “in nearly all countries . . . higher taxation is inevitable.”

“The crisis has left deep scars,” writes Olivier Blanchard, citing corporate bankruptcies, financial systems that have become partly dysfunctional, and the need for households in the United States to start saving again.

“All this means that we may not go back to the old growth path, that potential output may be lower than it was before the crisis.”

The assessment echoes the Bank of Canada’s latest outlook in July, when governor Mark Carney all but declared the recession in Canada over while also warning that the economy will emerge smaller and with a reduced output potential.

Canada has had three quarters of economic shrinkage — two successive quarterly declines is a technical definition of recession — so expected growth in the current summer quarter means the recession is over. However, employment growth is expected to lag and further job cuts are expected for several more months.

The IMF’s view that governments will have to raise taxes flies in the face of the public assurances of Prime Minister Stephen Harper and Finance Minister Jim Flaherty.

Both have insisted economic growth alone will be sufficient to eliminate the deficit over the next few years

Toronto economic consultant Dale Orr agrees that Ottawa can avoid raising taxes, but he says Canadians should be aware of what this means.

Orr and several other private sector economists have called Ottawa’s deficit projections out of date.

Just Posted

Red Deer County rejects cannabis production complex

Complex was proposed for Blindman Industrial Park

Stettler RCMP investigating fatal collision

A 57-year-old man was killed in a collision on Highway 12 near… Continue reading

Innisfail girl gone missing

Innisfail RCMP seek public’s assistance

Fog advisory issued for Red Deer area

Fog to persist through Tuesday morning

Lacombe police respond to local crime

Public reminded not to leave keys in vehicles

Bianca Andreescu’s win streak ends after early exit because of injury

MIAMI — The injury bug has derailed Bianca Andreescu’s impressive run. The… Continue reading

CONCACAF teams to learn Nations League draw on Wednesday in Las Vegas

Canada will learn its next CONCACAF Nations League opponents at Wednesday’s draw… Continue reading

Alanis Morissette announces pregnancy in Instagram photo

Alanis Morissette is pregnant with her third child. The Grammy-winning singer posted… Continue reading

“MLB The Show 19” allows video gamers a chance to relive baseball history

TORONTO — From Babe Ruth’s debut as a pitcher to Jose Bautista’s… Continue reading

Canada Revenue Agency tax services back online after ‘hardware’ problems

OTTAWA — The websites Canadians use to file their taxes online were… Continue reading

Roof structures failed before Radiohead stage came down, inquest hears

TORONTO — Metal structures meant to hold a roof over a stage… Continue reading

Opinion: Business tax relief is a sound idea

NDP leader should avoid picking winners and losers

Svechnikov scores in overtime, Carolina beats Montreal 2-1

RALEIGH, N.C. — The Carolina Hurricanes struggled to beat Montreal goaltender Carey… Continue reading

Most Read