Minister of Finance Jim Flaherty presented the federal government's annual fall economic update last week in Fredericton. The Minister focused on three key areas in his speech: the current state of the Canadian economy, major threats to the economy and the expected budgetary outlook for both the remainder of this year and for future years.

Minister Flaherty began his remarks by talking about the relative strength of the Canadian economy compared to other countries. He continued by reiterating that the government's Economic Action Plan has helped protect the Canadian economy. Minister Flaherty pointed towards Canada's job growth record as being the strongest amongst the G7 during the recession, with the majority of jobs coming from the private sector. Additionally, Minister Flaherty stated that Canada's Real GDP is above pre-recession levels and is the best performer in the G7.

Even with Canada's strong economic record in comparison to other countries, Minister Flaherty pointed out that Canada is not immune to being impacted by continuing global economic uncertainty. Lower commodity prices, for example, have already begun affecting revenue projections. Minister Flaherty also pointed out two of the more worrisome international risks to the Canadian economy: the crisis in Europe and the looming "fiscal cliff" in the US.

For the current 2012-13 fiscal year, the federal government is forecasting a deficit of $25-billion, plus an additional $1-billion adjustment for risk. The economic update states that the government expects a $1.8-billion deficit for 2015-2016, though that includes a $3-billion adjustment for risk, meaning that if those risks do not materialize, the books could still be balanced that year. Additionally, the report also indicates that Canada will return to surplus in 2016-17, with a surplus of $1.7-billion, and forecasts a surplus of $3.4-billion in 2017-18.