Further policy stimulus increasingly likely

As the outlook for global economic growth deteriorates markedly, there is a growing likelihood that more policy stimulus will eventually be required in Canada. The limited scope for further monetary stimulus, however, will put more of the burden on fiscal policy. Thankfully, there is at least scope for a significant fiscal stimulus if needed. The government has already pledged to provide further fiscal support if needed. Accordingly, Canada is arguably in a better position to weather the current downturn, particularly if commodity prices hold up.