Canada’s economy went from boom to bust faster than anyone could anticipate. Statistics Canada (Stat Can) data shows slower-than-expected real gross domestic product (GDP) in Q1 2024, along with a downward revision for the previous report. Combined with the rapid population growth, this has led to a rapid decline in per-capita real GDP. In fact, Canada’s per-capita real GDP rolled back to 2014-levels, indicating the country is facing a lost decade of household progress.
Canadian GDP Slower-Than-Expected, Gets Downward Revision
Canada’s economy is growing much slower than anticipated. Real GDP reported annualized growth of 1.7% in Q1 2024, smaller than analysts had anticipated. That was due in part to a downward revision of Q4 2023 to 0.1% for the quarter, a tenth of what had been originally reported.
Canada’s Per Capita Recession Has Extended For Nearly 2 Years
The growth rate is still positive, but nowhere near where it should be for the rate of Canada’s population. “When measured against a still rapidly growing population, per-capita GDP declined for the sixth quarter out of the last seven,” says Nathan Janzen, assistant chief economist at RBC.
In a research note to investors, he further noted a previously reported decline in per-capita GDP in Q1 2023 was revised to an increase, breaking the trend that goes back to Q3 2022.
Rising per-capita real GDP is indicative of rising real incomes, and advances in quality of life. The opposite is also true—a decline in per-capita GDP tends to mean a declining quality of life, as the same economic output is expected to carry more people.
Canadians Are Facing A Lost Decade of Economic Growth
Canada’s drop in per-capita real GDP only occurred over a few quarters, but occurred so fast it wiped out an unimaginable amount of progress. The most recent quarter of per-capita real GDP is roughly the same level it was a decade ago. Canadians just experienced a lost decade, with all progress made in the first 8 years wiped out within the past two.
Source: RBC.
The sharp slowdown was largely expected after going all-in on credit-driven growth, such as residential investment and government-driven stimulus. It won’t be a short-period either, with experts warning it will last for decades. The slowdown currently happening is also while the economy is viewed as “healthy,” so buckle up. Things can get a little messy in the short-term.