OTTAWA – The 21st century may not exactly belong to Canada, but according to a major world economic body the country is going to do pretty well.
In fact, the Paris-based Organization for Economic Co-operation and Development sees Canada among the world’s leading economic lights over the next 50 years.
In issuing its long-term view of how it expects world economies to unfold, the OECD says Canada will continue to lead the Group of Seven industrialized economies in average annual growth over the next half century.
And it will also be near the top on a per-capita basis — possibly a truer measure of success — with only Japan sneaking ahead.
The economic research organization, which represents most of the world’s biggest industrialized economies, predicts Canada’s real gross domestic product will average 2.2 per cent growth in the next half century.
Of the other G7 nations, only the United States and the United Kingdom with 2.1 per cent average advances come close.
That doesn’t mean Canada will beat all industrialized nations, however. Australia, New Zealand, Israel and Norway — whose economies are too small for admittance to the G7 club — are projected to experience even stronger average growth rates.
In part, Canada’s superior growth rates are based on expectations that its labour force will continue to grow, although more slowly in the age of retiring baby boomers. Some countries, like Japan and Germany, are likely to experience outright contraction, which is why they do well on the per capita measure.
“For Canada, it’s a fairly young population, fairly well-educated workforce and you have all these natural resources that give you higher growth than other countries,” said Matthias Rumpf, a spokesman with the organization.
The OECD cautions that the projections should be taken with a grain of salt, given the extended timeline horizon, but Bank of Montreal economist Doug Porter says in some ways long-term forecasts are more reliable. Time tends to smooth out short-term shocks, he explains.
Porter said nothing in the OECD overviews strikes him as being unrealistic.
“I don’t have a huge quarrel with the conclusion, I think we can or will likely lead the G7, but it’ll be a horse race with the U.S. in particular,” he said.
“I’m not sure I would be as positive on a per-capita basis. Canada hasn’t seen that kind of per capita gain in the past 30 years and I’m not sure we can really ramp it up in the next 30 to 50 years,” he added.
The OECD per capita income expansion implies strong productivity improvements, Porter said, not just for Canada, but many other nations as well.
Overall, the OECD believes the world will unfold pretty much as it has during the past decade with the emerging nations, particularly China and India, continuing their march to dominance as economic superpowers.
China, currently representing 17 per cent of global output, will by 2030 be the unchallenged economic leader with 28 per cent of global gross domestic product. The U.S. drops to number two at 18 per cent and by 2060 will drop to number three at 16 per cent. In 50 years, India will have surpassed it with 18 per cent of global GDP.
That doesn’t mean Chinese and Indians will be wealthier than Americans or Canadians — the size of their economy is largely a product of there just being more of them.
The current gap in relative living standards will have closed considerably, but not all the way given how far behind those nations are today.
“China will see more than a seven-fold increase in per capita income over the coming half century, but living standards will still only be 60 per cent of that in the leading countries in 2060,” the report estimates.
“India will experience similar growth, but its per capita income will only be about 25 per cent of that in advanced countries.”
The OECD says emerging nations and even some industrialized countries like Greece, Korea and Italy can markedly improve their growth prospects by making structural changes, such as increasing the flexibility of their labour markets and adopting other market liberalizing policies. Canada won’t gain as much, the organization says, because it is already at or near “best practices” in terms of economic efficiency.