Stephen Poloz expects year of economic stagnation ahead

Former Bank of Canada governor Stephen Poloz anticipates a period of stagnant economic growth for the next year or more.

In an exclusive interview with BNN Bloomberg’s Amanda Lang set to air on Friday, Poloz said over the previous two years, Canada could have had a balanced budget and reloaded its fiscal capacity. Instead, the country has been running deficits in an economy that is over capacity, he said. 

“That was pretty bad timing, but now the economy is if not in recession at least in a stagflationary kind of scenario, probably for the next 12 to 18 months,” Poloz said. 

As a result, Poloz predicted that fiscal deficits are likely to be higher due to slowing revenues, but he said it’s important that the deficit comes from government spending on items that will pay off in the future.