DOMESTIC POLITICS: The fortunes of the ruling Conservatives are waning. Their economic policy response to the current recession has appeared inadequate, in scale and speed of implementation, and the main opposition Liberal Party will continue to exploit this over the outlook period. The Liberals were able to force a system of budget progress reports on the government in January and are now in a strong position: the Tories hold only a minority of seats in parliament and are vulnerable to defeat in a vote of no confidence, which would trigger another general election or transfer of power. With two of the three parties--the Bloc Quebecois (BQ) and New Democratic Party (NDP)--currently opposing the budget, the Liberals only need to withdraw their support to trigger another election. However, they are aware of voter disinterest in another national poll so soon after the last one, and are wary of appearing to exploit the recession for political gain. The other two opposition parties will also not wish to lose votes to the Liberals, and their support is not assured. Given their persistent opposition to the current budget since its inception, however, a reversal would be extremely damaging. We therefore expect the Liberals to use the next progress report in December, rather than the June report, to trigger another election. On current performance, they will win the election, although also only with a minority of seats in parliament.

Source: Canada: Country outlook

Source: Country Forecast Canada September 2008

Source: EIU Country Data