Canadian Macro Performance: Better than the G-7 but…

We are of course quite used to repeated claims that Canada
has outperformed all other G-7 countries in job creation and GDP growth during
the recovery from the 2009 recession. Our better fiscal performance is also trotted out especially
with respect to the net debt to GDP ratio. However, if instead of the G-7, we compared to the smaller
economies of northern Europe – namely, the Baltic/North Sea economies of Finland, Sweden,
Norway and Denmark with the Netherlands thrown in for good measure – we find
that some of them have often done better than Canada.

Figure 1 presents an example of the types of comparisons
often presented in federal government documents – this one is from the recent
2013 budget and designed to demonstrate Canada’s superiority when it comes to
employment and real output growth.

Figure 1

Canada is however the smallest of the G-7 economies in terms of total
output and population. What if we
compared it to a set of smaller northern European countries? Taken together,
Sweden, Norway, Denmark, The Netherlands and Finland have a population of about
42 million compared to Canada’s 34 million.

Figures 2-4 show Canada’s performance relative to the
smaller northern European economies over the period 2009 to 2012 in terms of
employment growth, average unemployment rate and real GDP growth using data
from the IMF World Economic Outlook Database. Figures 2 and 3 show that while total employment in Canada
grew the most in this comparison group between 2009 and 2012, the average
annual unemployment rate was still lower in Norway, Denmark and The Netherlands.

As for average annual real GDP growth
over the 2009 to 2012 period, Figure 4 suggests that Canada was second to
Sweden though superior to the other countries.

Canada’s performance, while good, is a bit more mixed when compared to
these smaller economies which is an important reality check. Other OECD countries aside from Canada also seem to have done a reasonable job of weathering the recession compared to the G-7. By the way, in
terms of net debt to GDP, Canada has the highest net debt to GDP ratio relative to these Baltic/North Sea economies.

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Was Canada ever the best place in the world?

Tags: canada, economic performance, G-7, GDP growth, northern Europe

Jim Sentance · August 20, 2013 - 8:36 am · Reply→

Interesting. I wonder though, how the picture would change both for this group and the G7, if we took into account that unlike most of Europe, Canada still has a growing population. That pads our employment growth and our GDP figures.

Livio Di Matteo · August 21, 2013 - 10:36 pm · Reply→

If you compare Canada with Australia – over the same period, Canada has a higher unemployment rate, lower employment growth and a higher net debt to GDP ratio.

genauer · August 22, 2013 - 5:06 pm · Reply→

I think the numbers taken from the trough of 2009 are pretty meaningless.
My Germany looks good, because we dived deeper first, with having a larger global export fraction. Looking back one or 2 more years, it is a pretty boring consistent low stable growth story, we are nevertheless completely satisfied with : – )
We reduced certain efforts with regard to unemployment, and started programs to get chinese nurses and greek kindergarten teachers in, to put the employment numbers into perspective : – )
The HDI in the related article is based on completely outdated data (1991), by people who do not know what do make of central european apprenticeship models either, which make me question the validity for other non-Anglo countries either.
As far as I know, canadian pensions are covered to a much higher degree by assets, making the net debt/GDP number comparisons also weird.

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