Canada's economy is tanking, but at least investors have options
The Canadian economy is in some serious trouble if it stays on its current trajectory, as it has had the worst growth out of 50 developed economies since 2019.
This isn’t a surprise because growth comes from capital investment, whether from Canadians directly or from foreign investors, and the environment here keeps getting less and less attractive.
Business investment has plunged by a third under the Justin Trudeau government, according to Peter St Onge, an economist and a fellow at the Mises Institute, while government spending has nearly doubled to now account for almost half of the country’s gross domestic product. Bankruptcy filings here jumped 40 per cent last year, and the Canadian Imperial Bank of Commerce said nearly half of Canadians have zero emergency savings.
Unfortunately, this is taking its toll on the Canadian dollar, which has already fallen 13 per cent against the U.S. dollar since peaking in May 2021 and is down to 72 cents U.S. This means higher costs for goods imported from the United States. Keep in mind that Canada imported US$277-billion worth of goods from the U.S. in 2023.
Meanwhile, Trudeau’s solution is to hire more government workers. Over the past year, the public sector has grown by approximately 180,000 workers, more than the private sector and self-employed combined. Looking at the longer term, St Onge points out that the number of government workers is growing almost four times faster than the private sector and that one in three Canadians now works for the government (and they make 30 per cent more in salary and benefits than their private-sector counterparts).
Yes, it appears that inflation has been tamed, but St Onge highlights that since the pandemic, Canada’s official food inflation
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