Canada’s record of underperforming international peers pre-dates COVID

A Comparative Analysis of the Economic Performance of Canada and Its OECD Competitors, 2007-2019

• This essay examines Canada’s economic performance compared to a group of industrialized countries in the OECD from 2007 to 2019, the last full business cycle. The study assesses GDP, investment, and labour market performance.
• Starting with income measures, Canada’s GDP saw a 22.5% growth over the period, positioning it 14th among 32 OECD countries.
• However, when adjusted for per-person GDP, growth was modest at 7.2%, ranking Canada 19th out of 31 countries. This per-person performance indicates a decline relative to the OECD average, highlighting challenges in maintaining relative economic growth.
• Initially exceeding the OECD average in 2007, Canada’s investment, as measured by the ratio of total Gross Fixed Capital Formation (GFCF) to GDP, began declining in 2013 and fell below the OECD average by 2016.
• A particularly stark indicator of this trend is the 11.1% reduction, from 2007 to 2019, in business investment, as represented by private non-residential GFCF. This decline points to a substantial contraction in investment within key segments of the economy. Canada’s Government investment as a proportion of GDP also decreased 9.2% in the period.
• Labour market analysis reveals mixed results. Canada’s labour force participation rate and employment rate showed relative stability. However, public sector employment grew faster (17.3%) than private sector employment (13.3%).
• Labour productivity, measured as GDP per hour worked, increased by 10.3%, but this growth lagged behind the OECD average of 11.2%. Additionally, GDP per worker grew by 6.8%, further underscoring Canada’s position as one of the slower-growing economies among its OECD peers.