Thank you for the question.
When we set the economic and fiscal forecasts, our economic forecast is effectively a straight average of the 15 private sector economists that we survey. We take all their variables across a menu of different economic indicators and just take the straight average, including the nominal GDP level that we talked about.
Using that basic average, we then meet with the private sector economists. The Minister of Finance and I met with private sector economists last week to discuss their views on the Canadian economy and in particular any upside or downside risks facing both the international and global economies. On the basis of that discussion, we test the notion of how much downside risk we should protect the forecast against.
In the most recent discussion, which ultimately manifested itself into the $40-billion downward adjustment in question, I think there were a couple of factors. One is the risk of financial market volatility, the risk in the global economy, with China for instance, oil prices, and the futures curve versus where we're seeing the private sector survey. There's clearly some downside risk to the Canadian economy. That was point number one.
On the second point, when we met with economists in November, when we tabled the November update, we included a $20-billion adjustment for risk. Between the November survey and the February survey, we ate through that $20 billion and actually decreased in level terms by an additional $20 billion, so we would have required a $40-billion adjustment.
In that context, given the risk to the downside, the most recent adjustment, and the fact that we've had to revise the private sector survey over the last three surveys on an average of $40 billion, we judged it appropriate to start to recalibrate the $40-billion nominal GDP adjustment.