A fresh lens on Trudeau’s economic record: Parsing Canada’s revised GDP numbers
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Statistics Canada recently released annual revisions to its GDP numbers that show the nation’s economic expansion was more robust than initially estimated in the aftermath of the pandemic.
The changes are material enough to make Prime Minister Justin Trudeau’s record look better, which will no doubt offer some satisfaction to a government looking for good news on the economic front.
But the numbers don’t leave too much room for celebration. The underlying story remains the same: a middling economy, lack of new growth drivers, limited investment, and a potential trap of persistent sluggish growth.
Let’s dig into the revisions.
Growth was adjusted upward in 2023—to 1.5% from an initial 1.3%—and in 2022—to 4.2% from 3.8%. The 2021 expansion was also bumped up to 6%, from 5.3%. Altogether, the revisions show Canada produced a cumulative $8.32 trillion worth of goods and services over the three years—about $100 billion more than originally estimated.
These adjustments aren’t insignificant and improve some key economic metrics for Trudeau. For example, from 2020 to 2023, growth averaged 1.7% instead of the 1.3% initially reported. Even the recent decline in Canada’s GDP per capita looks slightly less troubling: down just 0.4% since 2019 compared to the prior estimate of a 1.6% decline.
Yet, the overall performance relative to peer nations remains underwhelming even with the revisions.
According to IMF data measuring 41 major advanced economies, Canada ranked 28th in terms of growth over the past nine years. We may rise a couple of spots with the revisions, but no more. (That said, Canada continues to outperform all the other G7 countries on headline growth except the U.S., as it did before the revisions.)
Per capita growth is similarly lackluster. Among the same 41 countries, Canada ranked fifth from the bottom in per-capita GDP growth since 2015, and the recent revisions will likely improve our ranking by just one spot. In this category, we remain at the bottom of the G7. By comparison, the U.S. has seen a 15% rise in per capita GDP since 2015, while Canada has managed just 3%.
The real concern isn’t just Canada’s middling performance; it’s the fear that mediocre may be as good as it gets.
Economists are banking on Bank of Canada rate cuts to give the economy a needed lift. Lower rates could ease debt pressures for households facing mortgage renewals, potentially freeing up spending. Since the pandemic, Canadian households have accumulated a staggering $541 billion in new net savings—equal to a quarter of all new savings amassed in the past six decades. This represents a substantial reservoir for potential spending.
But beyond that, there’s little to suggest strong growth on the horizon. The main drivers in recent years—population growth and deficit spending—seem largely exhausted. The Liberals have committed to deficit reduction, while the limits of immigration-driven growth are now visible, as evidenced by the federal decision to temporarily halt new foreign worker inflows.
Investment doesn’t appear poised for a major comeback without radical reforms to the tax and regulatory framework. A possible return of Donald Trump to the U.S. presidency could also introduce new uncertainties, adding a fresh layer of unpredictability.
So, what else will drive growth?
A fast-depreciating Canadian dollar, which could soon be worth less than 70 U.S. cents, will provide some relief to exporters and give a boost to some industries like manufacturing and Canadian tourism. But a weaker currency is a lousy engine of growth. It will keep the lights on at factories, but we’ll all be poorer.
