The Organization for Economic Co-operation and Development (OECD) has projected Canada’s real gross domestic product (GDP) per capita growth falling to last place to, in effect, become the next Greece and, as such, denying young Canadians the same opportunity as previous generations as they fall behind their peers in other advanced economies.
This post by Lorimer Wilson, Managing Editor of munKNEE.com, is an edited ([ ]) and abridged (…) excerpt from an article by Stephen Punwasi, for the sake of clarity and brevity to provide you with a fast and easy read. Please note that this complete paragraph must be included in any re-posting to avoid copyright infringement.
Canada’s potential real GDP per capita is just 0.7 percent per annum, tied dead last with Italy in the OECD. This is significantly below the U.S. (42% lower) and the OECD average (46% lower). In the previous period ending in 2020, Greece had occupied the last place spot.
It hasn’t always been that way. From 2000 to 2007, Canadian real GDP per capita grew 1.6 percent per annum, tied with the OECD average. It was the highest growth of any G7 country, even beating out the United States by 0.1 points per year. Canadians were winning when it came to seeing their quality of life improve but once the Great Recession hit, Canada began to slow down significantly, with its real GDP per capita growing only 0.8% per annum from 2007 to 2020, failing to outperform the OECD.
Given all of the information we know, it doesn’t appear Canada is learning any lessons. Canada has embraced cheap growth by way of residential investment and debt. This works short-term, but residential investment is non-productive with little contribution to future growth. Debt is the value of future productivity borrowed and used today, leaving less for the future. The more the country leans on these drivers, the more painful it will be to try and correct the course.
The potential real GDP per capita forecast from 2030 to 2060 is just 0.8 percent per annum. Canada’s forecast is 20% below the U.S. and 27% below the OECD average for the period, respectively. This is tied dead last with South Korea, putting Canada last for the next 40 years.
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