The government reports that Quebec’s economy gained momentum as real GDP rose by 1.5% in 2014, in comparison to 1.0% in 2013. The pace of economic recovery in Quebec is forecasted to increase as real GDP growth is expected to reach 2.0% in both 2015 and 2016. As was the case in 2014, real GDP growth is anticipated to continue to be largely driven by a rise in export activity, fuelled by a strengthening United States economy and the depreciation of the Canadian dollar. Further, the recent sharp decline in oil prices is expected to provide a net benefit to Quebec’s economy as the resulting energy savings translate to increased household consumption and business investment.
The main objective of Quebec’s fiscal policy remains to return to fiscal balance in 2015-2016. The fiscal deficit is expected to narrow further as consolidated government expenditures are budgeted to grow by 1.5% in 2015 and 2016, well below the anticipated rate of revenue growth of 4.3% over the same period. Further, the budget introduces a combination of tax relief and strategic business investment initiatives, including the gradual elimination of the contribution to the Health Services Fund and a gradual reduction of the provincial general corporate income tax rate to 11.5%. This is anticipated to result in $2.5 billion of tax relief for individuals and corporations, and motivate $13 billion of investments in Quebec’s economy over the next five years.