Canada’s near-term economic struggles will begin to resolve by the second half of next year when growth returns, a new forecast from Deloitte Canada says. Condo and office towers are seen in downtown Vancouver on April 25.DARRYL DYCK/The Canadian Press
The Honourable Anne McLellan and the Honourable Lisa Raitt are co-chairs of the Coalition for a Better Future, a group advocating for economic and social policies.
As Finance Minister Chrystia Freeland prepares to deliver the fall economic statement, our advocacy organization, the Coalition for a Better Future, urges the government to develop a robust plan to boost productivity and prosperity for all Canadians.
It has been seven months since we released the coalition’s annual scorecard of key metrics for Canada’s economy and expressed deep concern about the persistent weakness threatening to undermine our future prosperity.
Since then, our worries have only become heightened.
On a Per-capita basis, our economy has not only stalled but is contracting. Real GDP per capita has fallen over the past year faster than at any time in at least six decades outside of a recession, and we are producing less per person today than we were in 2018. Labour productivity, the amount of output generated per hour worked, looks even worse.
The outlook, meanwhile, is hazy. We will no longer be able to rely on low-interest loans to drive growth, like we have for much of the past two decades. In fact, the excesses of the past that have led to high household debt levels (among the highest anywhere) and out-of-reach housing prices will now act as headwinds. Governments, too, will face higher debt burdens that will limit their ability to continue stoking growth.
Look long enough at the numbers and it becomes pretty clear that in a world where consumers and governments will be pulling back, business will need to step in. We will need to develop an investment-first mindset.
Canada needs to have a long-term plan for economic growth that is inclusive and sustainable. We avoid advocating for specific proposals or taking sides in debates since we understand there are competing potential paths toward achieving our objective. But there are certain guardrails we think make a lot of sense.
The first principle of good economic management is to do no harm, so let’s not be too cavalier about how we think about and deal with our resource sector. Without energy exports, our dollar would be weaker and inflation and interest rates would be higher.
At the same time, the imperative of climate change means it can’t be business as usual. We will need to find a way to reconcile a healthy resource sector with our environmental goals, and the only way we’ll be able to do that is by accelerating the pace of private-sector investment in green technologies.
Businesses will need to step up and government will need to use its balance sheet to reduce risk, co-finance projects and provide other forms of cost certainty to help make the calculus work. The federal government has taken some key steps toward that direction, but we’re still waiting on it to execute its plan.
A second guardrail for policy is to foster a stable environment for this investment to take place. If we want corporations to ramp up capital spending in the coming years – in the order of hundreds of billions of dollars – we need to make businesses confident that they can get a return on their investment.
This will require unity of purpose across parties on, at the very least, core objectives such as the need to drive the energy transition, even if we don’t agree on specific policies. It means making sure Indigenous communities are part of the equation both for the private sector and governments.
It also means seeing corporate Canada as a partner. We hear from businesses that they are concerned about policy being drawn up for short-term files. Quick fixes don’t work when trying to solve our longer-term economic challenges. We should also stop demonizing profits, which is becoming uncomfortably mainstream. We will need healthy, profitable companies to drive the expansion of investment needed to drive up living standards.
A third important guardrail should be to get macroeconomic policy right. The best type of environments for business investment are the ones where policy achieves low and stable inflation.
Getting inflation down will require two things. One, fiscal policy needs to work in concert with monetary policy. They can’t work at cross purposes. Two, we need to maintain an independent central bank.
There are no easy answers. The problems we face are multi-faceted and long-standing. But Canada still has a lot of good going for it. We are a rich, prosperous country that does a lot right.
We believe we can overcome our problems. We refuse to accept that slow growth is inevitable.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.
The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.
Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.
Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.
Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.
In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.
This report by The Canadian Press was first published Nov. 5, 2024.
