They know we can see the numbers, right?
With Canadians growing increasingly pessimistic about the economy – among the myriad things going wrong in Canada – the Liberals are desperate for any source of positive information.
And they appear to believe they’ve found it, following the International Monetary Fund projecting Canada will have the highest GDP growth in the G7 in 2025.
Here’s what Finance Minister Chrystia Freeland said:
“The IMF expects Canada’s economy to grow the fastest in the G7 next year!
That’s not all: they revised Canada’s 2025 growth forecast upwards to 2.4%!
Our economic plan is working. We’re creating more good jobs, raising wages, and helping every generation get ahead.”
The IMF expects Canada’s economy to grow the fastest in the G7 next year!
That’s not all: they revised Canada’s 2025 growth forecast upwards to 2.4%!
Our economic plan is working. We’re creating more good jobs, raising wages, and helping every generation get ahead.— Chrystia Freeland (@cafreeland) July 18, 2024
As reported by the Financial Post, Canada is indeed set to have a decent topline growth number:
“The International Monetary Fund is upgrading its forecast for the Canadian economy, projecting it will now grow by 1.3 per cent this year and by 2.4 per cent in 2025, according to a report released Wednesday.
In both readings, the forecasts were increased by one-tenth of a percentage point from the IMF’s initial world economic outlook released in April.
For 2025, Canada is projected to be the fastest growing economy among the G7 and other advanced economies. The U.S. economy will rank second at 1.9 per cent and the U.K. third at 1.5 per cent growth next year.”
Understandably, the Liberals are doing everything they can to promote this.
After all, if Canada has strong GDP growth, it must mean Liberal policies are working, right?
Of course, there’s just one little fly in the ointment:
Per capita GDP.
There are two main ways for an economy to grow.
It can grow by becoming more productive – by producing more value with the same amount of labour and/or resources. This is the only way to actually increase our standard of living.
Or, it can grow by simply increasing the population. There is no gain in efficiency or productivity, there is just more economic activity because there are more people in the country. On its own, that kind of growth does not increase our living standards and can make us poorer on an individual basis.
Guess which kind of growth Canada has?
A few days ago, RBC explained exactly what’s happening:
“Surging population growth has prevented outright declines in Canadian gross domestic product, but per person output is falling, and the unemployment rate is rising like it usually only would be during a recession. Interest rate cuts from the Bank of Canada will eventually alleviate some of the pressure on households. As purchasing power is restored, we expect per capita growth will turn positive by the second half of next year.
“Higher interest rates alongside decades-high inflation in 2022-23 ate away at household purchasing power.
Weaker demand spurred a rise in the unemployment rate of a size that historically only happens in recessions.
But decades-high population growth has masked this recession-like economic backdrop. Canada has added 2.1 million additional consumers since mid-2022.
Real per person output has declined in six of the past seven consecutive quarters and unemployment has risen at the same time.”
As the chart below indicates, Canada may not be in a recession, but Canadians are in one:
The Liberals expect us to ignore all of this.
They are simply pretending that per capita GDP doesn’t exist.
And so, they keep trying to tout topline GDP growth numbers that are elevated only because the government is irresponsibly spiking immigration levels.
Until Canada returns to responsible levels of immigration, and until we start to focus on productivity growth rather than raw population growth, our living standards will continue to decline.
Spencer Fernando
