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Low oil prices bode well for Quebec economy, economists say

Even though plummeting oil prices are causing anxiety in some corners of the Canadian economy, Quebec is well-positioned to reap the rewards of the trend, according to one economist.

Drop in prices could give a boost to Premier Philippe Couillard's plans to balance the budget

Lower oil prices mean a lower Canadian dollar - and thus, more Quebec exports. Ryan Hicks examines what it mean for the Quebec budget deficit. 2:01

You notice it when you fill up your car: a bit more money left over in your pocketbook. You can thank low oil prices for that.

Even though plummeting oil prices are causing anxiety in some corners of the Canadian economy, Quebec is well-positioned to reap the rewards of the trend, according to one economist.

"It is more or less like a tax refund right into their bank accounts," said economist Brett House about the low prices Quebecers are paying at the pumps. That  frees up more disposable income for consumers to spend elsewhere.

The senior fellow at the Centre for International Governance Innovation says Quebec exporters benefit too.

"We have seen the Canadian dollar bid down to lows and that makes the kind of things that Quebec exports, both to the rest of canada and to the rest of the world, cheaper and more attractive.”

In turn, this benefits the province's bank account, says House, because those Quebec manufacturers then pay more corporate taxes.

Boost to balancing the budget

Quebec Finance Minister Carlos Leitão says low gas prices could speed up the province's economic growth. (CBC)
Right now, the price of a barrel is hovering around $50 and some analysts project it could go lower. The Minister of Finance says this could speed up economic growth and give him an extra boost as he tries to balance the budget.

"It's possible if the economy accelerates towards the end of the year, revenue will start to come in higher than expected. But we are not counting on that to achieve our goals," said Quebec Finance Minister Carlos Leitão.

House says low oil prices "should make Leitão's task of bringing the Quebec budget into balance a touch easier."

Opposition calls for long-term vision

The Coalition Avenir Quebec economy critic, André Lamontagne, agrees but believes the government needs a more long-term budget plan.

“To balance the budget long-term, you need to control the expense and you need to have a decent plan to make sure you have economic growth. And the forecast is we will trail Ontario and the rest of Canada far behind so I’m not too confident of the mid to long-term result of all this,” he said.

But if the short-term result helps nudge Leitão’s budget a bit more into the black, the Couillard government won’t just reap financial rewards, it could reap political rewards too.

About the Author

Ryan Hicks is a third-year law student at McGill University and a former Quebec political correspondent for the CBC. In 2018, he won the Amnesty International Media Award for his reporting from Guatemala about the root causes of migration from Central America to the United States.

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