Canada’s economy has ‘lost momentum’ and ‘very little to show for it’
The economy of Canada has “lost momentum”, says a study that warns the country has “an uncertain future” after its economy suffered a “substantial” drop in output.
The study by the Conference Board of Canada also says the economic outlook is “severely impaired” by a weakening global economy.
The conference board said its findings show that Canada’s GDP in 2017 dropped by more than 10 per cent, and is projected to drop another 10 per to 15 per cent this year.
“There are many positive signs and opportunities for the economy but the downside risks are high,” the report said.
It also noted that the country’s fiscal position was deteriorating.
“The federal government has not yet taken action to address the structural deficits, and there is a significant gap between revenue projections and actual expenditures,” the conference board wrote.
“Canada’s fiscal trajectory has been severely impaired and its fiscal position has deteriorated in the past two years.”
The Conference Board report said the decline in the economy was mainly due to the global financial crisis.
“While the recessionary forces have eased, they have not entirely disappeared,” it said.
“In the absence of an economic recovery, the Canadian economy will continue to struggle to return to a sustainable trajectory.”
The report said Canada’s public debt stood at $16.6 trillion at the end of 2018, up from $15.4 trillion at that time last year.
That is the largest in the G7 and the highest in the world.
The Conference of Mayors, which represents nearly 80 Canadian cities, said that “the federal government’s fiscal strategy is still inadequate to address this critical fiscal gap”.
“The lack of clarity around the federal government plans for a recovery from the economic downturn is leading to uncertainty and uncertainty is causing frustration among Canadians,” the group wrote.
The group also said it expects the federal debt to reach $22 trillion by 2020, “a significant increase” from $20 trillion at this time last season.
“It is also likely that the federal fiscal position will increase further,” the committee said.
In 2018, the government’s federal debt stood around $22.8 trillion, with $7.6 billion in interest payments on that amount.
The average federal debt per capita was $37,854 in 2018, according to Statistics Canada.
That compares to the average debt per Canadian family of four of $37.08.
The Canadian economy has experienced a significant downturn in recent years.
In the first six months of 2018 it recorded an annual decline of 6.3 per cent.
The drop is expected to continue, with GDP down 2.4 per cent for 2018.
The report says that the decline is largely due to “the global economic slowdown”.
“Canada is now experiencing the strongest slowdown in world economic activity in more than 20 years, and the slowdown is accelerating,” the research said.
The economic downturn has contributed to the loss of hundreds of thousands of jobs and forced the government to implement measures to boost the economy.
“This is a serious and long-term challenge that requires concerted and persistent action,” the Conference of British Columbia said.
Economists at the Conference Bureau of Canada said that Canada is “well positioned to benefit from a rebound in growth and to recover from the downturn”.
“We believe that the economic recovery in Canada will be modest and that it will remain modest for the foreseeable future, while the recovery in the U.S. will be stronger and more rapid,” the economists said.