For months, reports have produced a deluge of bad news about the state of the Canadian economy, under-performing from macroeconomic indicators to international rankings of economic freedom and competitiveness. Media outlets and analysts have warned that the country is on the brink of an economic depression, with unemployment rates rising, wages stagnating, business investment in steady decline, and public debt levels ballooning. From Albertans to Quebeckers, it appears Canadians are ready to toss out their traditional voting patterns and vote current Prime Minister Justin Trudeau and the ruling Liberals out of office in the forthcoming federal election.
A closer look at the many factors influencing the Canadian economic landscape reveals deeper issues at play. The oil price bust of 2014 and the resulting slowdown in Alberta, along with the retracted investments in Canada’s biggest province by both American and Canadian companies due to ongoing trade issues with the US, have been profound problems for the country and the liberals. The impact on the rest of the country of their losses has gone unspoken for many years, but with the economy in a nosedive, it’s becoming more obvious.
The Bank of Canada predicts the dismal state of the economy will soon drag the country into a technical recession. Canada’s unemployment rate has risen sharply from 5.9% to 7.1%, public debt levels are expected to soar well past the $1 trillion dollar mark, and household incomes have seen little to no growth in recent years. The combination of these factors has put Trudeau’s government on the receiving end of strong critique from the opposition — and peer pressure from the country at large.
The lack of foreign investment in Canada, and ongoing anxiety over the expanding deficit cast long shadows on the Liberals’ attempt at restoring economic prosperity. Higher taxes in the form of higher personal and corporate income tax have triggered a diaspora of both Capital and talent from Canada, sinking the Canadian dollar even further in the global markets. In the short run, the trend can be partially reversed by decreased public spending and return of public sector influence in favor of corporate presence in the country.
Confidence in Trudeau’s leadership has weakened, with a flurry of reports showcasing Canada’s low performance in numerous aspects of economic performance, such as labour productivity, job growth, housing affordability, and the ability to attract foreign investments. Although some that the circumstances of Justin Trudeau’s lack of progress in resuscitating the economy can be partially attributed to the sheer magnitude of the problems the ruling party inherited from previous Conservative government, current government’s failure to take the problems head-on has left many Canadians without any tangible improvements to their lives.
The consensus among prominent Canadian economists now is that this is a crucial time for the future of the Canadian economy. The government has a crucial responsibility to deliver solid economic growth that will inspire confidence and attract foreign investments back into Canada. Although Trudeau has promised massive spending on public infrastructure projects and tax breaks for high-tech industry, innovative economic ideas that will reverse the tide are urgently needed.
Canada’s economic situation speaks volumes of an economy urgently in need of rehabilitation. Four years of government has failed to bring any meaningful economic advancements and produced a surge in the poverty rate. And for many, their dissatisfaction is supplemented with the arguable hypocrisy of Trudeau’s dealings with sections of the economy that are most suffering. Unless Justin Trudeau’s government acts fast, many Canadians will vote for a new government to take the reigns and save the economy in the next federal election.