Saturday, September 23, 2023

G7 growth talk obscures poor income growth among Canadians

Recent forecasts, including from the International Monetary Fund, suggest Canada may compete with the United States for the top spot in the G7 in 2020 for economic growth.

Political partisans have since flooded social media with the impressive-sounding factoid—Canada may lead the G7 in growth next year. There’s nothing new about this talking point; partisans trot it out regularly when it suits their purposes.

There’s just one problem. Different population growth rates among G7 countries mean that straight comparisons of GDP growth numbers produce skewed results. Canada’s population growth ensures it will almost always be at or near the top of a slow-moving pack.

Start with a simple fact. Most G7 countries feature minimal population increases and weak economic growth. Japan provides the most striking example. With an aging population that shrunk by two million in the past decade, its economy is barely growing at all. Between 1999 and 2018, for instance, average nominal growth in Japan was just 0.2 per cent.

Other G7 members (France, Germany and Italy) also have slow-growing populations and economies. While Canada’s population has grown 1.1 per cent per year in the past decade, Germany’s has grown by 0.4 per cent.

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