As Canada Day approaches, there is much to celebrate about a healthy Canadian economy with bright prospects, though the country might not give that impression.
Canadians are coping with historically high inflation and interest rates, and shortages of housing and of skills.
And we are bracing for a long-expected recession.
Our peers are afflicted with many of those same challenges.
And the more important longer-term prospects for Canada are encouraging.
Canadian population growth is outpacing that of most industrialized economies, and Canada is posting the most rapid economic growth in the G7 apart from the U.S.
Some economists forecast that Canadian GDP growth in 2025 will eclipse that of the U.S., as well.
Canada is supposed to be a mature, slow-growth economy, the world’s eighth largest by some measures. But in recent years it hasn’t acted like one.
At about $2.8 trillion in size in 2022, a dynamic Canadian economy has grown by close to 30 per cent in just five years.
And the economy has diversified as it has grown. That can be seen from a Canadian stock market where tech stocks now account for more than 10 per cent of the total value of the S&P/TSX Composite Index, almost double the 2015 level.
Since early 2021, the S&P/TSX has outperformed the Bloomberg World Index of global stock markets. For instance, on June 20, one of the most recent comparisons available, the gap was pronounced, at a 13.6 per cent gain for the Canadian market compared with a 4.3 per cent increase in the world average.
The stock market is just one proxy for the economy.
Another is exports, which hit a record $822 billion in 2022’s third quarter.
Exports are poised for further growth as some of our major trading partners, notably China, fully recover from pandemic economic slowdowns.
And Canadian exporters still aren’t making full use of the free-trade opportunities available to them from Ottawa’s landmark trade treaties with the European Union and in Asia-Pacific.
Still another proxy is the robust health of the Canadian labour market, which has grown steadily through turbulent economic times to its current record 20.1 million workers. The Canadian economy remains at near full employment, for the first time in decades.
The International Monetary Fund (IMF) noted earlier this month that “Canada’s public debt is relatively low in international comparison.”
At a federally forecast 42.4 per cent in fiscal 2022-23, Canada’s debt-to-GDP ratio is expected to remain lower than that of our G7 peers.
In May, Ottawa reported a federal deficit for fiscal 2022-23 of $41.3 billion, down from $90.2 billion in the previous fiscal year.
That sizable drop lends credence to Ottawa’s projection of a federal deficit shrinking from its pandemic high of $327.7 billion in fiscal 2020-21 to $14.0 billion in 2027-28.
And it’s not just that “the world needs more Canada.” The world wants more Canada.
Many major economies, including China, face population declines in coming years due to low fertility rates and xenophobia.
In 2022, Canada, by contrast, welcomed more than 1 million new Canadians in a single year for the first time.
Statistics Canada forecasts that the Canadian population could reach 50 million by 2043 if current trends continue.
“Unlike any of his peers in the developed world, (Prime Minister Justin) Trudeau managed to show 40 million fellow citizens the benefits of immigration, evidenced by the economy’s performance,” Matthew Winkler, emeritus editor-in-chief of Bloomberg, recently wrote.
Also increasingly attracted to Canada are foreign investors. In the past two years they have poured tens of billions of dollars into the Canadian tech, auto, mining, agricultural, clean-energy, and other economic sectors.
And Canadian state investments in 21st-century industries have matched those of last year’s landmark U.S. Inflation Reduction Act (IRA).
Those investments, by Ottawa, the provinces, and their business partners at home and abroad, extend beyond the biggest-ticket government investments in electric vehicles (EV) and EV batteries.
They also embrace semiconductors, innovative agricultural methods, breakthrough pharmaceuticals, and decarbonization innovations. For example, in Hamilton and Sault Ste. Marie, steelmakers are using state assistance to experiment with making “green steel” from hydrogen rather than coal.
To repeat, the building blocks of greater future prosperity include more of the immigrants who have been building Canada since before Confederation.
And sound public finances.
And substantial public and private investment in the technologies and industries that will define the 21st century.
The 156-year Canadian project of creating a more nearly perfect country is a work in progress. In health care, affordable housing, Indigenous reconciliation, closing the gender pay gap and more, there is much work ahead.
Best wishes to you all, for an enjoyable Canada Day celebration.
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This data comes from MediaIntel.Asia's Media Intelligence and Media Monitoring Platform.