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David Dodge on Canada’s Twin Deficits and How to Scale Them

September 15, 2020

David Dodge writes on Two Mountains To Climb: Canada’s Twin Deficits and How to Scale Them for the Public Policy Forum. David looks at why Canada must come to grips not just with a massive fiscal shortfall but also consecutive deficits in our current account, a broad measure of our trading and investment relationship with the rest of the world.

A government plan must be growth-oriented, and David says there are five key priorities we must get right in order to raise the annual growth rate of potential GDP to well above the 1.8 percent trajectory pre-COVID-19. It will involve a combined effort of governments, businesses and households:

  • Enhance digitization of production of goods and especially services
  • Extend the life of a cleaner resource sector and facilitate a higher value-added composition
  • Maximize participation and adaptation of labour force
  • Enhance effectiveness and efficiency of public services
  • Restore confidence in fiscal stability

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