Imagine being the only non-player at a Golden State Warriors’ party – the room’s average height would noticeably drop upon your arrival. This peculiar scenario serves as an analogy to Canada’s declining real GDP per capita, a critical issue analyzed by author Philip Smith. While Smith presents compelling factors contributing to this decline, he overlooks Canada’s own version of the tall basketball players in the room, a segment with the potential to counterbalance the negative trends.
Smith highlights the influx of non-permanent residents (NPR) as a key factor impacting Canada’s GDP per capita. These NPRs, many of whom are students or employed in low-productivity roles, bring down the average, leading to the overall decline. However, Canadian citizens and permanent residents (PR), who have higher productivity levels, may be experiencing a different trend. Unfortunately, the lack of detailed data hinders a thorough analysis of this distinction.
Considering a rough estimate, the significant increase in NPRs from 2022 to 2024 likely contributed to a 2.0% drop in GDP per capita. Despite this negative impact, the possibility remains that Canadian citizens and PRs are faring better economically. The analogy of entering the Warriors’ party, where the average height falls without any player losing stature, underscores this point.
In evaluating Smith’s concerns regarding the economic challenges facing Canada, it is essential to address the underlying issues. The diminishing share of experienced workers due to retirements, declining labor productivity, and the growing NPR population are all factors that require attention. While quick fixes may be available for the NPR population, complex political decisions are necessary to implement lasting solutions.
It is crucial to not only focus on the immediate challenges but also to address the broader issues affecting the economy. By analyzing the root causes and implementing strategic measures, Canada can navigate its way towards economic stability and growth. The complex interplay of factors influencing GDP per capita demands a thoughtful approach and a commitment to long-term prosperity.
