The country remains disproportionately dependent on government spending and population increases for economic growth.
Even amid large increases in government spending and a rapidly increasing population, Canada’s economy is struggling to grow.
As reported by BNN Bloomberg, Canada’s GDP was flat in December of 2022, after a 0.1% increase the previous month.
Growth in Q4 of 2022 was 1.6%, a significant decline from previous quarters:
“Preliminary data suggest gross domestic product was flat in December as increases in retail, utilities and the public sector were offset by decreases in the wholesale, finance and oil and gas industries, Statistics Canada reported Tuesday in Ottawa. That followed a 0.1 per cent gain in November, which matched economist expectations in a Bloomberg survey, and a 0.1 per cent increase in October.
Overall, the monthly gains point to annualized growth in the fourth quarter of 1.6 per cent, according to an initial estimate from the statistics agency. Though it will likely be revised, it’s down sharply from a 2.9 per cent pace in the third quarter, 3.2 per cent during April to June, and 2.8 per cent in the first three months of last year.”
Where is the growth coming from?
As we know, it matters where growth is coming from.
In the ideal situation, growth comes from rapidly increasing private sector productivity, which – over time – means most people are getting wealthier in real terms.
But that’s not the case in Canada.
When you consider that our population is rapidly increasing, and a significant portion of our growth is from government spending, you can see how that’s not sustainable and doesn’t translate into an improved standard of living for Canadians.
And, as noted by Statistics Canada, the public sector continues to grow at both the federal and provincial levels:
“The public sector rose 0.3% in November, up for the seventh consecutive month. Public administration (+0.5%) contributed the most to the growth, followed by health care and social assistance (+0.2%), also up for a seventh month in a row.
Almost all industries within public administration posted gains, with federal public administration (except defense) (+0.7%) and provincial and territorial public administration (+0.7%) contributing the most to the increase.”
This is a key reason there is such a big disconnect between government claims about the economy and the experience of individual Canadians.
Did the Canadian economy technically grow last year?
Yes.
Did Canadians get poorer on a per-person basis?
Yes.
So, the more the government tries to focus on growth that is being juiced by spending borrowed money and increasing the population, the more Canadians will rightfully see the government as being completely out of touch with reality.
Spencer Fernando
