What Trudeau's resignation will mean for Canada's economy
Justin Trudeau says he will step down as prime minister once a new leader of the Liberal Party is selected, ending months of speculation.
Gov. Gen. Mary Simon has agreed with his request to prorogue Parliament until March 24.
Questions about Trudeau’s leadership have swirled for more than a year, but reached a peak on Dec. 16 when Chrystia Freeland, his deputy prime minister and finance minister, resigned from cabinet just hours before she was to present the fiscal update.
The move escalated the political uncertainty around the country and caused the Canadian dollar to plummet below 70 cents U.S. for the first time since the early days of the pandemic.
Here’s what economists think Trudeau’s resignation will mean for the economy.
Trudeau’s resignation “ushers in a new wave of uncertainty for the Canadian economy and financial markets,” Tu Nguyen, an economist at tax consultant RSM Canada, said in a note following the announcement.
In a sign of how the political upheaval has rattled markets, Bloomberg’s Canada Economic Policy Uncertainty Index surged to 650, its highest level ever, far outstripping its last peak posted at the start of the pandemic.
The index has typically hung around the 200 to 350 mark over the past few decades.
“The jump in uncertainty highlights the risk to the economic outlook caused by the political sector,” Nguyen said.
Political stability has attracted investors to Canada in the past, and she worries the uncertainty caused by a prorogued Parliament could discourage foreign investment.
This year was supposed to be a rebound year as inflation continues to ease and Bank of Canada interest rate cuts boost the economy. Now, that rebound could be in jeopardy, Nguyen said, at least in the short term.
“This
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