By Paul Vieira
OTTAWA--Canadian Prime Minister Justin Trudeau on Sunday said his government would spend nearly $2 billion to help fuel growth in the country's domestic artificial-intelligence sector, the latest in a series of multibillion-dollar announcements the Canadian leader has vowed won't stoke a fresh round of inflation.
Over the past week, Trudeau and other senior officials have unveiled spending items that will be part of the Liberal government's annual budget plan, set for release in the country's parliament on April 16. To date, the bulk of the money promised has focused on increasing housing construction.
The pledge to boost AI indicates that Trudeau's government intends to reveal more budget-related spending pledges this coming week. On Monday, Canadian officials are expected to unveil plans to ramp up defense spending, amid concerns the country isn't pulling its weight as a member of the North Atlantic Treaty Organization.
The Bank of Canada has warned that stronger-than-anticipated government spending could thwart efforts to slow inflation to its 2% inflation target. Trudeau said Sunday that the government's spending measures, like the one he unveiled Sunday, aren't expected to fuel a new round of upward price growth, adding inflation in Canada has slowed for two straight months.
Economists have warned a weakening economy and spending pressures mean Canada's budget deficit is likely to exceed 40 billion Canadian dollars, or the equivalent of US$29.43 billion - a level that Finance Minister Chrystia Freeland has vowed not to cross. Over the weekend, Freeland told Canadian Broadcasting Corp. that she intends to meet her fiscal promise. Some business groups fret that new taxes targeting wealthy Canadians or corporations will be part of the 2024 budget plan to help finance new measures.
In Montreal on Sunday, Trudeau said Canada would spend C$2.4 billion that would, among other things, help build data centers and servers and ensure access to the computer power required to conduct research in the AI field. "We need to make strategic investments that will create jobs, enhance productivity, and maintain our position as a world leader in technology sectors," he said.
A report from consulting firm Deloitte & Touche's Canadian unit said venture-capital investment in Canada's AI sector reached C$8.6 billion in 2023, adding Canada ranks third among Group of Seven countries in terms of per capita venture-capital AI investments, trailing the U.S. and U.K.
Trudeau said the billions to help AI will help draw in foreign investment, and that is designed to lift economic growth. Pressed over concerns of wider budget deficits, Trudeau said Canada's public finances are among the strongest in the G-7.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
04-07-24 1958ET
