Investing in Business is Essential to Tackling Canada’s Productivity Crisis – Canadian Energy News Highlights Key Headlines, Commentaries, Features & Events

The Bank of Canada’s senior deputy governor, Carolyn Rogers, has sounded the alarm on Canada’s productivity crisis, calling it an “emergency” that requires immediate action. Rogers emphasized the urgent need to address Canada’s weak business investment, which is contributing to stagnant living standards in the country.

Recent data shows that Canada’s per-person GDP growth has been virtually flat over the past decade, with living standards remaining unchanged. In fact, Canada’s per-person GDP was among the weakest in the five years leading up to 2019, even before the COVID-19 pandemic hit.

Looking ahead, the OECD predicts that Canada will have the lowest rate of per-person GDP growth among advanced economies over the next 40 years. Countries like Estonia, South Korea, and New Zealand are expected to surpass Canada in terms of living standards by 2060.

The root cause of Canada’s productivity crisis lies in weak business investment. Total business investment in Canada has declined significantly in recent years, leading to a decrease in productivity growth. While other countries, such as the United States, have seen continued growth in business investment, Canada has fallen behind.

To address this issue, experts suggest that Canadian governments should focus on reducing regulations, controlling government spending, and creating a pro-growth tax environment to attract more business investment. These policies have been proven to stimulate economic growth and improve productivity in Canada.

Without significant changes in the investment climate and productivity growth, the economic outlook for Canada remains bleak. However, with the right policy reforms, there is hope for a brighter future with stronger economic growth and increased productivity.