About that political instability - Macleans.ca

About that political instability


Economists consider what that other economist has said about the ruinous effect of an election right now.

TD Bank chief economist Don Drummond, a former senior Finance official, noted that during elections and for longer periods if the government changes hands, there is a slowing in spending by departments, particularly of discretionary spending.

However, the effect on Ottawa’s $12-billion infrastructure stimulus designed to fight the recession would be minimal, if at all, he added…

Economists have a little more sympathy for Harper’s contention that an election risks political instability and could affect confidence in markets and the economy in general, although even here, they say the prime minister is stretching a point.

Under normal circumstances, the shutting down of government during the six weeks of an election would have little repercussions on the behaviour of businesses, markets and consumers, noted Ian Lee, MBA director of the Sprott School of Business at Carleton University in Ottawa.

He pointed out that Japan, which fell the hardest during the recession, just recently completed an election and yet still managed to be one of the few countries to manage growth during the second quarter. By contrast, Canada’s economy shrank by 3.4 per cent during the period.