The global economic uncertainty poses "obvious risks" to Canada but it won't change the government's plan to slash spending and balance the books, Finance Minister Jim Flaherty said Wednesday.
Flaherty said the Conservative government's plan to eliminate the deficit by 2014-15 by finding $4 billion per year in savings is a "responsible approach" and the current global economic turmoil will not cause him to veer from it.
"We will stay the course, we will stay on track, we will continue with the plan," he told reporters. Flaherty was in Wakefield, Que., for his annual policy retreat with an invited list of guests who will discuss economic issues facing Canada over the next two days.
Flaherty said the global situation is volatile and that Canada is currently feeling the effects of the uncertainty, along with the rest of the global economy. The global markets took a startling nosedive in the wake of last week's downgrading of the U.S. debt rating by credit rating agency Standard and Poor's.
"Financial markets have reacted to the uncertainty generated by U.S. fiscal challenges, concerns about U.S. growth and the continuing debt problems in Europe," said Flaherty. "This continued uncertainty at a time when the global economy remains fragile poses obvious risks for Canada."
Canada is a trading nation and has "deep linkages" with the American economy, he added.
He emphasized in his remarks that there are other challenges that need to be dealt with in the long-term including a rapidly aging workforce, how to boost productivity and addressing the "continued weakness" in the economies of Canada's trading partners.
Canadians should be confident about the economy
Even though it is facing a number of risks, Flaherty touted Canada's economy, saying it's performing "relatively well" compared to other nations. There have been seven consecutive quarters of growth, he noted, and the International Monetary Fund has issued positive forecasts.
The finance minister said he has no plans to issue his fall economic update to the House of Commons any earlier because of the latest global economic developments.
At the same time as warning about the risks the Canadian economy is facing, Flaherty said the country is prepared to handle them.
"While we should not underestimate the risks, Canadians can be confident that our country is well-positioned to face global economic challenges," he said.
Flaherty said Canada needs to plan beyond the short-term challenges and focus on strategic issues such as how Canada can compete better in the global economy.
He said those issues will be a focus of discussions at the policy retreat and he expects the talks to produce "valuable advice."
Flaherty said the guests were "distinguished Canadians," business people and academics. Among the guests are Sean Durfy, former president and CEO of WestJet; Karen Sheriff, president and CEO of Bell Alliant; David Frum; Nitin Kawale, president Cisco Systems Canada; Andrew McKee, CEO of Juvenile Diabetes Research Foundation Canada; L. Ian MacDonald, managing editor of Policy Options Magazine; and Ian Lee, professor at the Sprott School of Business.