Scotiabank chief economist Warren Jestin speaks to a Rotary Club of Red Deer group at Red Deer College on Wednesday.

Economist praises message of fiscal prudence in federal budget

Scotiabank’s chief economist is giving the federal government a thumbs-up for the belt-tightening budget it tabled on Tuesday.

Scotiabank’s chief economist is giving the federal government a thumbs-up for the belt-tightening budget it tabled on Tuesday.

Warren Jestin, who was in Red Deer yesterday, said balancing the books and reducing debt should be “Job 1” for the Canadian government — and its provincial counterparts.

“Countries with big debts and big deficits ultimately have to raise taxes, which reduces their competitiveness and cuts spending, which reduces the quality of their educational system, their health-care system and their infrastructure.”

Operating in the black would give Canada a strategic advantage over other countries, said Jestin during a presentation at a Rotary Club of Red Deer luncheon at Red Deer College.

“I was very encouraged, in that budget, that rather than delivering a lot of glitzy things we tended to end up with a story that stuck to the message of restoring fiscal prudence and sustaining fiscal prudence in this country. When was the last time you heard the president of the United States say he was going to balance the books?”

Jestin also offered a bright economic outlook for Western Canada, particularly Alberta and Saskatchewan. He noted that Alberta’s population — which consists of many young and skilled workers — grew by more than three per cent last year, while Ontario’s and British Columbia’s increased by just one per cent.

One determinant of Alberta’s future prosperity will be whether pipeline projects like Keystone XL are approved, said Jestin. That in turn is dependent on politics.

He suggested that U.S. President Barack Obama’s current focus is to gain a majority in Congress when mid-term elections are held in November. And that will likely influence his decision on Keystone, with the reaction of voters in each state a key consideration.

“My gut feeling is he’ll probably defer it simply because he doesn’t know the consequences or the outcome politically on actually signing on the dotted line. But I think it’s going to be signed.”

Economic forecasting is a challenging endeavor these days, said Jestin, because there are so many factors are at play — some of which are unprecedented.

For instance, China’s role in the global economy is transforming from seller to buyer. He explained that the Asian powerhouse needs commodities for things like steel production, and has also developed a huge appetite for consumer goods.

China has become the world’s biggest auto buyer, as well as the number 1 market for luxury goods, said Jestin. In the case of tourism, it’s now the biggest spender, having surpassing the United States and Germany in recent years.

Also making it difficult to predict the future are technological developments, he said, pointing to the unexpected impact that advances in fracking and horizontal drilling have had on energy markets.

“Five years ago, we exported $35 billion worth of natural gas to the U.S.,” said Jestin. “And last year it was down to $12 billion.”

In fact, North America has become a low-cost energy area that’s attracting some manufacturers back in a movement called “re-shoring.”

Jestin sees plenty to be optimistic about in the United States, where consumer confidence and spending has been boosted by improvements in the labour, housing and equity markets. Even U.S. government debt is moving in the right direction, having dropped to $680 billion last year after four years in excess of $1 trillion.

Europe is slowly pulling itself out of the recessionary hole it’s been in, although Jestin worries that high youth unemployment in countries like Spain and Greece is creating a “lost generation.”

The proposed Comprehensive Economic and Trade Agreement between Canada and Europe has the potential to help Canadian businesses, said Jestin, as do the federal government’s efforts to strike trade deals with other counties.

“We still sell 74 per cent of our exports to the U.S., but if you’re looking at growth, rather than levels, you will see the growth opportunities in many other parts of the world,” he said, noting that less than 10 years ago 84 per cent of Canada’s exports were going to our southern neighbour.

hrichards@bprda.wpengine.com

Just Posted

Trudeau poised to shuffle, retool cabinet with focus on Liberals’ team for 2019

OTTAWA — Justin Trudeau will shuffle his front benches Wednesday to install… Continue reading

Aecon Group joint venture wins Enbridge Line 3 replacement contract

TORONTO — Aecon Group Inc. says its joint venture with Robert B.… Continue reading

Conservative party pulls attack ad of black man walking over Trudeau tweet

OTTAWA — The Conservative party pulled an attack ad from its Twitter… Continue reading

Groundbreaking ceremony held for new international bridge

DETROIT — U.S. and Canadian officials touted the friendship between the two… Continue reading

Elon Musk apologizes for calling cave rescue diver a ‘pedo’

BANGKOK — Tesla and SpaceX CEO Elon Musk has apologized for calling… Continue reading

Lab-grown meat could be in restaurants in 3 years

BERLIN — A Dutch company that presented the world’s first lab-grown beef… Continue reading

Duchess of Sussex wears dress by Calgary’s Nonie to Mandela exhibition

CALGARY — A fondness for Canadian fashion apparently hasn’t waned for Meghan,… Continue reading

Destiny’s Child singer Williams seeks mental health help

LOS ANGELES — Destiny’s Child singer Michelle Williams says she’s seeking help… Continue reading

A Comic-Con without Marvel, HBO gives others a chance to pop

Over 130,000 pop culture devotees are descending on San Diego’s Gaslamp District… Continue reading

Record 10 homers as AL wins All-Star Game 8-6 in 10 innings

American League 8 National League 6 (1o innings) WASHINGTON — A record… Continue reading

Photos: Red Deer barn dance entertains children, adults Tuesday

Hundreds of Central Albertans started their Westerner Days celebrations early with an… Continue reading

Man suffers critical injuries, Red Deer police arrest woman in pedestrian crash

A man is in hospital with critical injuries and Mounties have arrested… Continue reading

Cull hasn’t been able to solve bunny burden in Alberta mountain town of Canmore

CANMORE, Alta. — Problems persist in an Alberta mountain town overrun with… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month