TORONTO, Dec. 13, 2017 (GLOBE NEWSWIRE) -- Canada needs new big ideas for growth and a concerted effort to tackle our well-known and long-standing economic inhibitors if we want to sustain the growth and prosperity we have enjoyed in recent decades. Canada’s long-term economic-growth rate could be slashed in half in coming decades owing to a range of factors including slowing productivity, falling energy investment, and slowing labor force growth, according to a new report by The Boston Consulting Group (BCG). The report, Prosperity@150: Delivering Big Ideas for Growth, is being released today.
Over the past 20 years, Canada’s GDP grew faster than any other G7 country, but the report reveals that the country’s growth rate could fall sharply—from an average 2.4% in 1997 to 1.2% in 2030—in the absence of new growth drivers and reforms tackling structural barriers.
“Canada has thrived over the past two decades thanks to our talented workforce, stable economic and political environment, and openness to trade and investment,” says Kilian Berz, a BCG senior partner, the chair of the BCG Centre for Canada’s Future, and a coauthor of the report. “As Canada was celebrating its 150th anniversary, we asked ourselves whether we could continue to expect the economic growth we have enjoyed in past decades. Unfortunately, without new growth ideas and reforms, the answer is no.”
Fading Growth Engines
The Prosperity@150 report attributes much of Canada’s recent growth to factors that may be fading or unsustainable, including the following:
- Ballooning consumer spending on the back of record growth in consumer debt
- A real estate boom that is unlikely to be sustained and may turn into a bust
- Major challenges to our energy industry, whose jobs and investment impact have been of vital importance to the broader economy
- Growth that has been driven largely by increases in labor and capital rather than innovation and gains in productivity
Slow growth matters. The 1.2 percentage point gap mentioned above may appear insignificant, but compounded over 25 years, it could mean a $10,000 difference in GDP per capita. This has big implications for our incomes, as well as tax revenues that support health, education, and other programs that Canadians value.
A Two-Pronged Path Forward
To maintain strong growth, the report recommends a two-pronged path. First, we need to attend to the completion of overdue reforms, such as the dismantling of interprovincial trade barriers. Second, we should deliver on a set of big ideas—such as making our cities smarter and leveraging artificial intelligence and robotics—that could transform Canada’s economy and society.
“There’s no guarantee that what made the Canadian economy grow faster than its G7 counterparts over the past 20 years will last over the next two decades,” says Keith Halliday, director of the BCG Centre for Canada’s Future and a coauthor of the report. “While there can be a path for sustained growth, Canada will be facing major headwinds, and significant efforts will be required both to resolve long-standing issues and to make the most of new opportunities.”
Incomplete reforms can have a significant impact on the economy. Some analysts estimate that trade barriers between provinces could cost Canada up to 7% of GDP annually. The report identifies other areas that would benefit from review and further action by Canadian governments and private sector leaders, including labor force participation gaps; science, technology, engineering, and math education; and personal and corporate tax policy.
Some of Canada’s major new growth opportunities are related to the digital revolution, Canada’s talent advantage, and emerging knowledge clusters. Big potential benefits also beckon in areas such as future-proofing the energy sector, bringing marginalized communities into the economic mainstream, and maximizing global flows of investments, goods, and talent.
A copy of the report can be downloaded here.
To arrange an interview with one of the authors, please contact Alexandra Corriveau at +1 212 446 3261 or corriveau.alexandra@bcg.com.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with offices in more than 90 cities in 50 countries. For more information, please visit bcg.com.
The Boston Consulting Group
Alexandra Corriveau
Head of Media Relations, The Americas
Tel +1 212 446 3261
corriveau.alexandra@bcg.com