Challenges to Canada’s Prosperity Are Larger Than Ever—But So Are the Opportunities

Canada has experienced impressive growth over the past two decades, but significant challenges lie ahead. To lay the foundation for ongoing economic success and a sustained quality of life, informed choices and bold action will be needed.

During the period from 1995 to 2016, Canada attained the highest rate of GDP growth—2.4%—of any G7 country. An economy maintaining growth at this rate would double in size every 30 years.

Just as momentous as achieving this growth rate, however, is the challenge of sustaining it. Several of the trends that have driven Canada’s rate of growth in recent years threaten to stall growth in the future.

  1. Growth to date has come from working ‘harder,’ not ‘smarter.’ That is, Canada has added labour and capital but hasn’t boosted multifactor productivity as much. The latter results from innovation, technological change, and productivity improvement—and is a powerful boost to GDP growth.
  2. Growth has been driven by hard-to-sustain consumer spending backed by record debt.
  3. Canada's growth has also benefited from a red-hot real estate boom—that is likely to cool.
  4. Much of Canada's growth and many jobs have resulted from the energy sector, a $1-trillion growth engine that faces significant pressures.
  5. An impending workforce gap in Canada will be hard to close through traditional levers.

If all these potential threats to Canada’s economy fully materialize, the country could see its stellar growth stall and GDP growth rates drop by 50% or more in the years ahead.

A Two-Pronged Path Forward

Canada’s strong economic performance over the past few decades has allowed the nation to put off addressing growth and productivity inhibitors that many less-well-off countries have been forced to tackle head-on.

The first set of levers to pull is completing unfinished reforms to boost productivity. The second set is delivering on big ideas—that is, large-scale and innovative solutions— to drive growth.

CanInfra Challenge and Canadian Transformational Infrastructure Summit

One of the first projects undertaken by the Centre for Canada's Future is the CanInfra Challenge and the Canadian Transformational Infrastructure Summit. This six-month initiative is a collaboration with The Globe and Mail and other private-sector partners. It seeks to advance Canada by promoting a national conversation on infrastructure.

The CanInfra Challenge will enable all Canadians to surface ideas that can bring transformational benefits for Canada. The summit will bring together thought leaders from across Canada to discuss our greatest infrastructure issues and how to tackle them.

BCG's Centre for Canada's Future is supporting both the challenge and summit—and will be sharing insights on infrastructure topics in the coming months.

For more information, please visit CanInfra.