Despite a swift post-pandemic recovery, Canada’s standard of living is on pace to rank last among major global economies over the next three decades..In fact, Canada is projected to rank dead last in terms of per capita gross domestic product (GDP) growth among 38 Organization for Economic Co-operation and Development members by 2060, according to a new report by TD Economics..“Unfortunately for Canadians, little turnaround in Canadian living standards appears to be on the horizon,” writes economist Marc Ercolao..He makes the point that “economic growth does not necessarily equate to economic prosperity.”.But quality of life is a whole other matter..“While aggregate GDP is one thing, standard-of-living is another, and when Canada’s economic performance is adjusted for the rising population count, it reveals a picture that leaves much to be desired.”.In the decade ahead of the pandemic, Canada matched the US tit-for-tat in terms of average growth at just over 2% per year, above the 1.4% G-7 average, writes Ercolao..In the post-pandemic period, the country managed to shake off the deepest contractions in 2020 to record the second fastest average expansion among peers, thanks to contributions from a high level of immigration..Ironically, those high immigration levels are masking fundamental structural weakness — namely, Canada’s real per capita GDP has been declining even after factoring in the higher head count..According to Statistics Canada, the country’s population last month hit 40 million for the first time..“At the start of the 1980s, Canada enjoyed an edge against the average of advanced economies of almost US$4,000 while keeping fairly level with US estimates. By 2000, this advantage had all but evaporated and US per capita GDP had pulled ahead of Canada’s to the tune of over $8,000,” TD said. .Since 2014/15, “Canada’s performance has gone from bad to worse.”.Canada’s “innovation gap” — or research and development spending as a percentage of GDP — is the second-lowest in the G7, slightly ahead of Italy. Capital spending per worker — which factors in higher levels of immigration — trails the US by more than 20%..Inefficient regulatory and tax policies are other factors cited as inhibitors to Canadian productivity and innovation..In terms of real GDP only Alberta, Saskatchewan and Newfoundland and Labrador exceeded the national average in 2022. And that was owing to the high capital intensity of their respective oil and gas sectors..Post-pandemic, BC and PEI are the only provinces that have recovered to their 2019 real GDP per capita levels. Nonetheless, both still sit below the national average which has less than fully recovered from the pandemic..The TD report notes real GDP per capita has already contracted over the last three quarters and its most recent forecast points to continued contraction until the end of 2024. .The bottom line? The crux of the problem remains a sagging performance in labour productivity. .“The issue has largely flown under the radar as the Canadian economy seemingly masked ongoing productivity issues with what appears to be unsustainable growth via adding more workers,” it said..“Without fundamental changes to our approach to productivity and growth, Canada’s standard-of-living challenges will persist well into the future.”
Despite a swift post-pandemic recovery, Canada’s standard of living is on pace to rank last among major global economies over the next three decades..In fact, Canada is projected to rank dead last in terms of per capita gross domestic product (GDP) growth among 38 Organization for Economic Co-operation and Development members by 2060, according to a new report by TD Economics..“Unfortunately for Canadians, little turnaround in Canadian living standards appears to be on the horizon,” writes economist Marc Ercolao..He makes the point that “economic growth does not necessarily equate to economic prosperity.”.But quality of life is a whole other matter..“While aggregate GDP is one thing, standard-of-living is another, and when Canada’s economic performance is adjusted for the rising population count, it reveals a picture that leaves much to be desired.”.In the decade ahead of the pandemic, Canada matched the US tit-for-tat in terms of average growth at just over 2% per year, above the 1.4% G-7 average, writes Ercolao..In the post-pandemic period, the country managed to shake off the deepest contractions in 2020 to record the second fastest average expansion among peers, thanks to contributions from a high level of immigration..Ironically, those high immigration levels are masking fundamental structural weakness — namely, Canada’s real per capita GDP has been declining even after factoring in the higher head count..According to Statistics Canada, the country’s population last month hit 40 million for the first time..“At the start of the 1980s, Canada enjoyed an edge against the average of advanced economies of almost US$4,000 while keeping fairly level with US estimates. By 2000, this advantage had all but evaporated and US per capita GDP had pulled ahead of Canada’s to the tune of over $8,000,” TD said. .Since 2014/15, “Canada’s performance has gone from bad to worse.”.Canada’s “innovation gap” — or research and development spending as a percentage of GDP — is the second-lowest in the G7, slightly ahead of Italy. Capital spending per worker — which factors in higher levels of immigration — trails the US by more than 20%..Inefficient regulatory and tax policies are other factors cited as inhibitors to Canadian productivity and innovation..In terms of real GDP only Alberta, Saskatchewan and Newfoundland and Labrador exceeded the national average in 2022. And that was owing to the high capital intensity of their respective oil and gas sectors..Post-pandemic, BC and PEI are the only provinces that have recovered to their 2019 real GDP per capita levels. Nonetheless, both still sit below the national average which has less than fully recovered from the pandemic..The TD report notes real GDP per capita has already contracted over the last three quarters and its most recent forecast points to continued contraction until the end of 2024. .The bottom line? The crux of the problem remains a sagging performance in labour productivity. .“The issue has largely flown under the radar as the Canadian economy seemingly masked ongoing productivity issues with what appears to be unsustainable growth via adding more workers,” it said..“Without fundamental changes to our approach to productivity and growth, Canada’s standard-of-living challenges will persist well into the future.”
