Canada’s economy is trailing behind its international trading partners and is projected to be the worst in per-person gross domestic product among OECD countries by 2060, a new study finds.
According to a study by the Fraser Institute think tank, Canada is getting poorer, with economic growth “substantially” declining since Prime Minister Justin Trudeau took office in 2015.
The study compared Canada’s GDP per capita, or the per person economic output of the country, to the other OECD countries in three separate periods: 2002 to 2014, 2014 to 2022, and 2022 projected out to 2026.
“Canadians are getting poorer compared to peer countries,” Alex Whalen, the director of Atlantic Canada Prosperity at the Fraser Institute and one of the authors of the study, told True North in an interview. “The unfortunate news is that Canada’s performance in terms of per person GDP has been poor and is projected to get worse.”
According to the study, Canada’s per capita GDP, measured in US dollars, exceeded the OECD average by $3,141 in 2002, had fallen to about the OECD average in 2022, and is projected to fall below it by $8,617 in 2060.
Whalen said Canada had an 8.6% lead over the OECD average for economic growth in 2002.
“That lead was still 8.2% in 2013, 8.5% in 2014, but that lead has vanished, and Canada actually trailed the OECD by 2022,” Whalen said.
The per person GDP ratings for each country reflect growth in economic output while accounting for inflation.
Between 2014 and 2022, the period primarily presided over by Trudeau’s Liberal government, Canada’s per capita GDP declined by around 9%, leaving it 0.5% lower than the 2022 OECD average, the study found.
“There’s projected divergence going forward in the OECD projections, as Canada will fall further behind the OECD through to 2060 if the projections hold,” Whalen said.
The study compared Canada to four of its “significant” trading partners, which have economies similar to Canada: Australia, New Zealand, the United Kingdom, and the United States.
“There has been a separation between Canada and those countries during the (2014-2022) period as well,” Whalen said. “Per person GDP in Canada by 2022 was just 72% of that in the United States; if you go back to 2002, it was 81.5%.”
According to the study, the Canadian GDP per capita in 2014 was $44,710, 81% of the U.S.’s $55,605.
In 2022, Canada’s per person GDP was $46,035, while America’s GDP was $63,685, growing the gap from $10,895 to $17,649.
He said Canada’s other major trading partners with comparable economies told a similar story.
“Canada’s growth trajectory has diminished, even compared to similarly situated countries,” he said. “Canada’s GDP as a percentage of Australia was 101.2% in 2002, declining to 91.2% in 2022.”
Whalen pointed to several reasons Canada’s economic growth has fallen behind its peers.
“The largest policy factor depressing growth in Canada is the investment climate, which has experienced a precipitous decline in recent years,” Whalen said. “When there is less investment, there tends to be less growth. Workers are less productive, and ultimately, we see declining incomes, as shown in the study in 2014 and 2022.”
He said the natural resource sector, which drives a lot of growth in Canada, suffered the worst declining investment environment as it faced an increased regulatory burden.
Whalen said the increased regulatory burden on industry, the large and growing size of government, and Canada’s uncompetitive tax rates also contribute to the country’s declining economic growth rate.
“But the biggest single factor driving Canada’s relatively low and declining rates of growth is the investment record,” he said. “Canada needs to improve its investment climate if it wants to improve its growth trajectory. I think it’s pretty clear we’re in a growth crisis right now.
