Canada’s standard of living falling behind other advanced economies: TD
A brand new financial report from TD says Canada is falling behind the standard-of-living curve in comparison with its friends.
According to the report revealed final week, Canada has been lagging behind the U.S. and different superior economies when it comes to lifestyle efficiency (or actual GDP per capita), regardless of latest years of “headline growth.”
“Economic growth does not necessarily equate to economic prosperity,” TD economist Marc Ercolao wrote
Aside from contemplating GDP, Ercolao explains, standard-of-living high quality is a vital consider understanding Canada’s financial efficiency.
In the ten years earlier than the pandemic, Canada was fairly near the U.S. when it comes to common progress, simply over two per cent per 12 months, which hovered above the 1.4 per cent common for all G7 international locations, Ercolao says.
Following the turmoil of the pandemic, Canada managed to tug off a robust financial restoration, rising with one of many quickest progress charges in comparison with different superior economies. Ercolao cites the expansion of the nation’s inhabitants as a big contributor to this financial progress.
According to the report, Canada’s financial output per individual (actual GDP per capita) has truly been lowering for a few years.
Back within the Eighties, the report factors out, Canada was doing higher than the common of superior economies by about US$4,000 per individual. Over time, nevertheless, the benefit light, and the U.S. jumped to US8,000 an individual, in line with TD.
Ercolao writes that the 2014-15 oil shock led to a worsened financial efficiency. Canada’s actual GDP per capita has grown at a sluggish fee of solely 0.4 per cent on yearly, which is far slower than the common of different superior economies (which has an annual fee of 1.4 per cent).
The latest improve in inhabitants progress to a few per cent per 12 months is just not the primary problem — particularly because the common inhabitants progress since 2020 has solely been barely larger than earlier than 2000 (round 1.2 per cent).
The actual downside, in line with Ercolao, is that GDP progress has been lowering because the Eighties. This signifies that low GDP per individual is just not merely due to the rising inhabitants however the slower progress of the economic system itself.
The report states that the decline is basically associated to productiveness.
Regions like Alberta, Saskatchewan, and Newfoundland and Labrador, the place the economic system depends closely on the trade of commodities, used to have the very best GDP per individual, TD says. Over the previous ten years, nevertheless, their lead has been challenged. Following the pandemic, solely B.C. and P.E.I. have been capable of elevate their GDP per individual ranges they’d within the years previous to COVID-19, TD stories.
“This underscores that without fundamental changes to our approach to productivity and growth, Canada’s standard-of-living challenges will persist well into the future,” the report says.
