Bloomberg: What Canada's Slow Growth Tells Us


mentalfloss
#1
What Canada's Slow Growth Tells Us

Canada's Conservative government has long made sound economic management the centerpiece of its claim to office. Now, with the country's outlook showing mixed signals and a federal election coming next year, I'm looking at ways to measure the health of the economy, and what each says about Canada's.

This installment examines gross domestic product, probably the most commonly cited gauge of economic performance. Canada's economy beat the average for developed countries in the wake of the recession -- growing in 2008, shrinking less than others in 2009 and hitting 3.4 percent growth in 2010.

But what was once a success story is starting to look like something else. The Organization for Economic Cooperation and Development forecasts that Canada’s economy will grow by 2.3 percent in real terms this year. That is the same rate projected for OECD countries overall; next year, Canada’s growth is forecast to slip below the OECD average.

So while the Conservatives may boast about a growing economy, in relative terms Canada’s once-impressive performance has been replaced with a struggle to hold even with its peers.

A hard look at Canada's economy also needs to include the ingredients for long-term GDP growth, and there are plenty of candidates -- for example, share of Canadians with a post-secondary degree, or patent applications filed by Canadian companies. But it's hard to beat research and development spending, along with its corollary, the number of people working in science and technology.

How does Canada look on that front? Not great. In 2006, the country spent almost $30 billion on research and development, according to data from Statistics Canada. Until that point, the annual figure had risen each year for three decades, even after accounting for inflation.

In 2007, that increase slowed; in 2008, it reversed. And by 2012, the most recent year for which Statistics Canada has released data -- and three years after the recession ended -- R&D spending in real terms was barely above the level of a decade previous.

In fact, the sharpest drop, from 2009 to 2012, corresponds to annual reductions in federal R&D employment. The Conservatives inherited a federal government in which the number of people working in research and development had been growing since 2003. That trend continued until 2009; since then, it has fallen every year.

Ottawa now employs about the same number of R&D personnel in natural sciences and engineering, for example, as it did in 2006, Stephen Harper’s first year as prime minister. A serious debate over the economy, which seems overdue in Canada, should include asking whether dismissing government scientists is helpful.

What Canada's Slow Growth Tells Us - Bloomberg View (external - login to view)
 
darkbeaver
Republican
#2
It's telling you/us to get your money out of your bank.
 
mentalfloss
+1
#3  Top Rated Post
Quote: Originally Posted by darkbeaverView Post

It's telling you/us to get your money out of your bank.

You're assuming people have money in the bank to begin with.
 
captain morgan
Bloc Québécois
#4
Quote: Originally Posted by mentalflossView Post

But what was once a success story is starting to look like something else. The Organization for Economic Cooperation and Development forecasts that Canada’s economy will grow by 2.3 percent in real terms this year. That is the same rate projected for OECD countries overall; next year, Canada’s growth is forecast to slip below the OECD average.

Canada is an export nation. The other nation's catching-up is more of an indication that their economies are recovering and getting back to speed. What is really described in the above quote are the relative differences between growth patterns representing recovery rates more than anything else.

Remember, as an export nation, Canada is more at the mercy of the global markets (demand) and considering our venture through this last recession, the message is that we as a resource based economy are somewhat more recession-proof than other nations.


Quote: Originally Posted by mentalflossView Post

A hard look at Canada's economy also needs to include the ingredients for long-term GDP growth, and there are plenty of candidates -- for example, share of Canadians with a post-secondary degree, or patent applications filed by Canadian companies. But it's hard to beat research and development spending, along with its corollary, the number of people working in science and technology.

How does Canada look on that front? Not great. In 2006, the country spent almost $30 billion on research and development, according to data from Statistics Canada. Until that point, the annual figure had risen each year for three decades, even after accounting for inflation.

I am a little baffled that the report would put such emphasis on this element.... R&D is firstly, an expensive game to begin with (ie. when times are good, one sees expansion) and secondly, an element that is heavily impacted by the private sector R&D activities in this area.

Government sponsored R&D in this case is not something that is necessarily a strong indicator of projected growth
 
taxslave
No Party Affiliation
+1
#5
SLow steady growth is better than huge increases. Some people, mostly those that live off the markets put far too much emphases on rapid growth to maximize profits in a given quarter with no thought to the future other than creating another bubble to exploit.
 
darkbeaver
Republican
#6
Quote: Originally Posted by mentalflossView Post

You're assuming people have money in the bank to begin with.

I am, and those without will, I assume, not try to get some out. If you will be a little more patient I will make a huge blunder and you can have as many free kicks as you like. It won't be long I promise.

Quote: Originally Posted by taxslaveView Post

SLow steady growth is better than huge increases. Some people, mostly those that live off the markets put far too much emphases on rapid growth to maximize profits in a given quarter with no thought to the future other than creating another bubble to exploit.

Any time your slow and steady is threatened with a huge increase you can send me the nasty surplus and I will take care of it till you feel safe again.
 

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