Finance Minister Chrystia Freeland recently said Canada will have the “strongest economic growth in the G7.” But is it true? And are Canadians better off because of it?
The Trudeau government regularly uses comparisons between G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) to assess Canada’s economic performance. And when you compare overall economic growth (meaning overall growth as measured by GDP), Minister Freeland is correct that Canada’s economy is doing well compared to other G7 countries.
Specifically, from 2000 to 2023, Canada’s average GDP growth rate (adjusted for inflation) was 1.8% per year, the second highest in the G7 (after the United States). And in a recent report, the International Monetary Fund predicted Canada’s overall GDP growth rate would be the second-highest in 2024 and lead the G7 in 2025.
However, these indicators have serious problems. Because it does not take into account each country’s population growth rate, it is not possible to measure whether individuals’ lives have actually improved.
Simply put, an economy grows when more people produce goods and services (i.e., population increases) or when people can produce more per hour of work (i.e., productivity increases). Masu. In recent years, Canada’s economy has grown almost exclusively through population growth, which has grown at historic rates due to record levels of immigration, while productivity has declined to the point where it is now considered an emergency.
In fact, from 2000 to 2023, Canada led the G7 in average annual population growth, which served to boost the country’s total GDP growth.
Therefore, to more accurately measure Canada’s economic performance relative to other countries, economists use GDP per capita, which accounts for differences in population growth rates. This measure is a better indicator of an individual’s income and standard of living.
In this regard, Canada lags economically. The average annual growth rate of Canada’s GDP per capita (after adjusting for inflation) from 2000 to 2023 was 0.7%, ranking it tied for second-lowest in the G7 after Italy (0.1%).
The situation worsens when we focus on the Trudeau government’s tenure, including parts of the broader developed world. From 2014 to 2022 (the most recent year of available data), Canada had the third-lowest average annual growth rate of inflation-adjusted GDP per capita of the 30 Organization for Economic Co-operation and Development (OECD) countries. Canada’s average growth rate over this period (0.6%) was only higher than that of Luxembourg (0.5%) and Mexico (0.4%).
Canada’s long-term economic outlook going forward is equally dire. According to the OECD, Canada is expected to have the lowest average annual growth rate of GDP per capita in the OECD from 2020 to 2030 and from 2030 to 2060.
When Minister Freeland brags about total GDP while ignoring how historic population growth is inflating the numbers due to record levels of immigration, she is misleading Canadians. In fact, Canada’s standard of living lags behind other developed countries and is expected to fall further in the coming years.
