Canada managed to sail through the global economic crisis. It sustained its growth rate and boosted the economy to grow even in the wake of the worldwide economic perils, majorly the sovereign debt crisis in Euro-zone. Its federal fiscal plans are being appreciated by markets as it favors low cost borrowing. The system of banking in Canada has been very strong and didn’t even require any kind of taxpayer bailout during the tough times in 2008-2009.Inspite of all this, the risky worldwide economic situation and risk averse financial markets are a drag on business confidence and competitiveness.
Though Canadian economy has benefited from its robust institutional framework and credible policies but from last few years its economic growth has relied majorly on increasing labor markets and huge capital inputs.Growth of multifactor productivity (MFP) has been unfavorable and dwindling from past one decade.Business R&D, copyrights and patenting rates are very despicable indicating low levels of innovation.Innovation is required to achieve MFP, which is important for raising living standards.
Canadian Economic Highlights
Per Capita GDP
GDP per capita continues to remain just one level below the average of the upper half of OECD member countries.This can be directly attributed to the gap in productivity.
• Labor mobility is expected to be raised due to some favorable changes in Employment Insurance Program.
• High barriers to entry for domestic and foreign firms.
• Actions must be adopted to enhance productivity by reducing barriers to Foreign Direct Investment, enhancing business R&D, and bolstering tertiary sector attainment rates.
Economic Reform Measures
• Reducing barriers to entry and enhancing capacity built in network sectors and professional services.
Action taken: No significant action is taken in this area.
• Restrictions regarding Foreign Direct Investment (FDI) requires to be less stringent. Barriers to competition in important industries needs to be reduced to facilitate an increase in inward FDI.
Action taken: The government has recently announced that it would lift barriers to FDI in������ � telecommunications companies that hold less than 10% share of the market.
• The tax structure can made more growth oriented by moving the tax load from direct to indirect taxes.
Action taken: The Harmonized Sales Tax has now been implemented in five provinces. The federal government has progressively reduced the general corporate income tax rate to 15% from start of the year 2012.
• Greater and improved investmnets in R&D may effectively raise the ability of the firms to innovate and sell their products.
Action Taken: The 2012-2013 budget consolidated tax credits and used a share of the savings to raise direct grants.
• Reforming Employment Insurance Programme requires introduction of experience rating into Employment Insurance or to scale back access for seasonal or temporary workers in high-unemployment areas.
Action taken: In the 2012 federal budget had adopted this measure of tightening Employment Insurance (EI) rules depending upon workers background of the use of EI benefits, the longer and more often the workers have claimed employment insurance in the past, the broader their job hunt has to be and they must be ready to accept lower wages.
|Year||GDP % Change||Inflation % change||Year||GDP % Change||Inflation % change|
Source: World Bank
|Antigua and Barbuda||Jamaica|
|Costa Rica||United States|
|Last Updated on : 23th February 2015||Next Update : February 2016|