Economic conditions have deteriorated and commodity prices have fallen sharply since the February 2008 budget. This has occurred because of heightened financial market dislocations anda sharp weakening in global demand, ledby asignificant slowdown in the United States. Private sector forecasters expect real gross domestic product (GDP) growth of 0.6 per cent in 2008 and 0.3 per cent in 2009, well below forecasts at the time of the February 2008 budget. Private sector forecasters are now expecting atechnical recession, with negativegrowth in the fourth quarter of 2008 and the first quarter of 2009. The sharp decline in commodity prices this year is expected to reduce the level of nominal GDP in 2009 and 2010 relative to Budget 2008. However, over the medium term, commodity prices are expected to recover, bringing nominal GDP back to Budget2008 levels. Nominal GDP is the broadest indicator ofthe tax base in Canada. There is greater-than-usual uncertainty surrounding the economic outlook. Given the weakness in the U.S. economy and heightened global financial market turmoil, the balance of risks to the Canadian economic outlook is tilted to the downside. Canada is facing this period of global uncertainty from a position of relative strength, reflecting the soundness of Canadian financial institutions and solid financial positions of households, corporations and governments. Canada's strong fiscal situation has allowed the Government toprovide significant fiscal stimulus, including broad-based, permanent tax relief and significant investments in infrastructure for the benefit of allCanadians.download
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