Over the past few years, Canada’s standard of living has been lagging behind other advanced economies as per-capita GDP growth slowed down compared to previous decades.
According to a report by TD Bank, Canadian economic growth has slowed compared to countries like the United States as a result of lacklustre per-person productivity and poor public policy.
Canada has seen GDP growth comparable to some of the G7’s best-performing economies at just over 2% per year in the last decade, but much of the GDP growth is not reflected in improvements to prosperity but is instead reflective of large population growth as a result of the Trudeau government’s immigration policy.
In 1980, Canada’s real GDP per capita was almost $4,000 USD higher than the average advanced economy and was comparable to the United States. By 2000, this advantage had dissipated and the United States moved ahead of Canada in real GDP per capita by over $8,000 and its advantage over Canada has grown to over $21,000 USD per capita.
Since the 2014-15 oil crisis, Canada’s real per capita GDP growth had slowed once again to a poor rate of 0.4% compared to the 1.4% rate of the average advanced economy.
The report points to firms investing lacklustre sums of money into nonresidential structures, machinery and equipment, intellectual property and research & development.
The report specifically points to underwhelming investments into research and development as causing an innovation gap, a problem that had already existed in Canada but was being exacerbated.
Poor tax policy and regulatory climate were also mentioned as inhibiting productivity and innovation contributions to the economy.
Pessimistically, the report concludes that for the foreseeable future, Canada’s innovation, productivity and economic growth problem will not be remedied, as Canada’s record immigration and systemic issues will result in unimpressive outcomes.
TD forecasts that real GDP per capita will contract until the end of 2024 as the federal government continues to pursue ambitious immigration targets that will continue to prop up population flows.