The Business Council of Canada's new report notes that "Canada is a country of unlimited potential and opportunities. Yet recent economic performance has been weak, lagging peer countries. The problem stems from stagnant productivity – an inability to generate additional income for each hour worked."

Canada’s economy is shrinking, and without urgent action, the country risks falling even further behind its global peers, according to a new report by the Business Council of Canada. The report, Engines of Growth, authored by Senior Vice President of Policy Robert Asselin, highlights that Canada’s GDP per capita has declined for five consecutive quarters and is now smaller than it was in 2019, once adjusted for inflation and population growth.

“This is a wake-up call,” Asselin said. “We cannot sustain our living standards or our cherished social programs if we don’t take decisive steps to fuel economic growth.”

The report paints a bleak picture of stagnating wages and productivity. Average weekly earnings have grown by just 1.6 per cent between January 2015 and January 2024 — an increase of less than 0.2 per cent per year. At the same time, Canada has slipped to 18th place in productivity among OECD nations, down from sixth in 1970.

A roadmap for economic renewal

Asselin’s report, however, is not without solutions. Engines of Growth presents a roadmap for Canada to reverse course and regain its economic footing. At the heart of his plan is a push to transform Canada’s economy into a technology-driven powerhouse. Asselin argues that Canada must shift from a consumption-based economy to one focused on production, innovation, and competition in advanced industries like biotechnology and clean energy.

Drawing inspiration from countries like South Korea and Singapore — once lagging economies that are now global leaders in technology and innovation — Asselin believes Canada has the potential to achieve similar success.

Technological innovation: Key to future prosperity

The report stresses that economic growth has historically been tied to technological advancement. Asselin points out that Canada’s underperformance isn’t just a short-term problem; it reflects a deeper challenge in productivity and innovation. GDP per capita has declined in six of the past seven quarters, and Canada’s economic output per hour worked is now only 71 per cent of that in the United States, a sharp drop from the 88 per cent mark in 1984.

Policy choices for long-term growth

Asselin outlines five key areas where Canada can reignite its economic engines: focusing on energy security, leveraging advanced industries, removing regulatory barriers, coordinating innovation policy, and fostering public-private partnerships.

“The good news,” Asselin concludes, “is that Canada has the talent, resources, and capacity to turn things around. But progress is a policy choice — we must choose to act now.”