Standards of living have dropped steadily in Canada since 2019 and, without a turnaround this year, the country is set for the longest streak of deterioration in decades, according to a new study.
The
study published by the Fraser Institute, says Canada’s real gross domestic product (GDP) per person, an inflation-adjusted measure of the goods and services produced by the nation per individual, dropped 3 percent between April 2019 and the end of last year, from $59,905 to $58,111. The institute uses the statistic as a metric for incomes and therefore standards of living.
“This represents one of the longest and deepest declines in real GDP per person since 1985, exceeded in both respects only by the decline and recovery that occurred from Q2 1989 to Q3 1994,” the study concludes. “However, the decline in incomes since Q2 2019 is ongoing, and may still exceed the downturn of the late-1980s and early-1990s in length and depth of decline.”
The only steeper drops in the 40 years covered by the study were from 1989 to 1994, with a decline of 5.3 percent, and the financial crisis of 2008 to 2009, when it dropped 5.2 percent. It is also the second-longest decline over the period covered by the study, after a 21-quarter streak between 1989 and 1994, the institute said.
“The severity of the decline in living standards should be a wake-up call for policymakers across Canada to immediately enact fundamental policy reforms to help spur economic growth and productivity,” Jason Clemens, executive vice president at the Fraser Institute, said in a
release announcing the study.
The statistics also show that immigration in Canada is growing faster than the economy. This is because, although overall GDP—the broadest measure of goods and services produced by the nation—has grown, the share of that output per person has declined as the number of people in the country has jumped. For instance, Canada has one of the fastest-growing GDP figures in the G7 group of industrialized nations, but one of the lowest GDP per person figures.
Statistics Canada data shows the country’s population last year
grew 3.2 percent, the fastest pace since the 1950s and the post-World War II baby boom. That means the population grew by 1,271,872 people last year alone, and 97.6 percent of that came from immigration. Meanwhile, overall real GDP grew 1.1 percent in 2023, prompting real GDP per capita according to the data.
Another Statistics Canada
report, released last month, said increases in labour productivity are “critical” if the country is to accelerate growth in GDP per capita, as productivity gains have accounted for 93 percent of the growth over the last four decades.
According to Numbeo, an online database of cost of living and
quality of living information from around the world, Canada has fallen to 33rd place worldwide in quality of life, as of 2023. Canada was in seventh place in 2012, when Numbeo began keeping such records. The 2023 figure places Canada just behind France and far behind the United States, which ranked 15th in terms of quality of life.
