OTTAWA - An improving economic landscape is putting Finance Minister Jim Flaherty on a more solid footing going into Thursday's budget announcement.
A Royal Bank analysis shows the government's deficit could come in at $25 billion -- and as low as $20 billion -- for the current fiscal year, well south of the $31 billion Ottawa had calculated in November.
With three-quarters of the year's numbers in, government revenues have been coming in above expectations, while expenses have been well below.
That puts Flaherty ahead of schedule for eliminating the deficit in 2016-17, by as much as two years, based on current trends, says RBC chief economist Craig Wright.
When the minister met economists earlier this month, they advised him that the risks to the global recovery had diminished, mostly because Europe was dealing with its debt crisis and U.S. growth had resumed.
Since then, they have told Flaherty to plan for the economy to grow by 2.1 per cent this year and 2.4 per cent next year.
While risks remain, Wright says they have diminished. It's unlikely Flaherty will need to use the $3.5 billion he put on reserve during this fiscal year, he says.
