Canada’s standard of living experiences sharpest decline in four decades

Canada’s GDP per capita has been on a downward trend since 2020, falling 0.4% annually, making it the worst rate among 50 developed economies. This decline threatens to be the longest and largest since 1985, according to a recent study by the Fraser Institute. The study, conducted by Grady Munro, Jason Clemens, and Milagros Palacios, analyzed the three worst periods of decline and recovery of real GDP per person in Canada since 1985.

The study found that the latest decline in GDP per person began in 2019 and has lasted for 18 quarters, making it the second longest in the past 40 years. Inflation-adjusted per-person GDP fell by 3% from $59,905 to $58,111 between April 2019 and the end of 2023. This decline is only surpassed by the declines seen during the recession of the late 1980s and early 1990s, as well as the aftermath of the financial crisis in 2008.

The study also highlighted that GDP per person in the fourth quarter of 2023 was down 0.8% from the previous quarter, indicating that the decline is ongoing. If GDP per capita does not recover in 2024, this period could mark the longest and largest decline in per-person GDP over the last four decades.

The study’s findings align with recent observations by Ruchir Sharma, chair of Rockefeller International, who identified Canada as one of the countries experiencing a steep decline in real per-capita income growth and a drop in their share of global GDP. Sharma noted that Canada’s economic growth has been lagging behind due to a lack of investment and job growth driven mainly by the government.