Posthaste: Canada could face two more decades of stagnant growth, report warns
There has been a lot of talk lately about Canada’s dismal growth, but now a new report warns that we could be stuck in it for another two decades.
The study from Canadian financial firm Omnigence warns that Canada is headed for a “protracted bout of stagflation” in which the country will continue to suffer low growth and higher inflation.
“It seems plausible that Canada will continue to experience stagnant real GDP/capita over the next two decades as the issues … are resolved before returning to the more historically typical growth trajectory,” said the report led by Omnigence director Stephen Johnston.
Canada is expected to have the lowest real growth rate among countries in the Organisation for Economic Co-operation and Development over the next three years, but that doesn’t take into account its rapid rise in population, says the report.
When you look at GDP per capita — “the only metric that matters in the real world” — Johnston argues that Canada has been experiencing “early onset” stagflation for almost a decade. After years of rising steadily, that metric has been flat in U.S. dollar terms since 2013.
Canada is also losing capital, with more leaving the country than is entering it on a yearly basis, he said. And productivity, another precursor to economic growth, has been lagging the United States since around 2014.
Our housing market is a problem, with a 3-million-home shortfall and no clear resolution to solving it, he said.
Shortages contribute to inflation and divert much-needed capital away from more productive activities.
Canada has the highest share of investment in housing in the OECD, making it overly reliant on real estate for GDP growth.
“Simply put, Canadians spend far too much on housing, use
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