Kevin Carmichael: The sleeper issue that will determine the future of Canada’s economic success
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The unwillingness of Canada’s biggest companies and richest investors to engage has left the country ill-prepared for the hyper-competitive, digitally oriented economy that awaits on the other side of COVID-19
Business investment in machinery and equipment was 3.1 per cent of GDP in the first quarter of 2020, according to Statistics Canada data, compared to a quarterly average of 3.7 per cent since 2000. The figure crested at around four per cent a decade ago, and hasn’t touched that level since the end of 2014, when oil prices collapsed.
Money wasn’t the issue: corporate profits were strong. But whatever the reason, the unwillingness of Canada’s biggest companies and richest investors to engage has left the country ill-prepared for the hyper-competitive, digitally oriented economy that awaits on the other side of COVID-19.
Last year, the Bank of Canada dropped the rate at which it estimates the economy can grow without stirring inflation to a meagre 1.4 per cent, from 1.8 per cent previously. The reason: the pandemic had cut off the flow of immigrants, which up until 2020 had been the primary driver of economic growth, and the country’s companies were too inefficient to make up for the loss.
The Financial Times newspaper’s list of the Top 100 companies of 2020 included just one Canadian firm: Ottawa-based Shopify Inc., which was ranked No. 22. The table was dominated by Chinese (36) and American (30) outfits, but South Korea, Japan, Denmark, Germany, Australia, France, Spain and Sweden all appeared at least twice.
“This culture of being risk averse is a challenge for Canada,” Bains said.
