Cory Morgan: Canada Must Take Decisive Steps to Restore Real Growth

Commentary

Canada’s economic growth has been sluggish for some years now. It hasn’t been above 1 percent growth in a quarter since the beginning of 2023 and has reached negative numbers occasionally. While the economy has been flirting with being in recession, it hasn’t quite reached that point. At least, it hadn’t until now. Canada’s economy on an annualized basis shrank for the last two quarters in a row, which puts the country into a technical recession.

It’s not an economic catastrophe by any means, and the country could pop back out of this rut with a little growth in the next quarter, but Canadians should be concerned. Economic growth could continue its decline, and the country could face a full-blown recession if some things don’t change. Things have been tough for many Canadians since the days of the COVID pandemic, and the last thing people want to think about is more hard times.

Prime Minister Mark Carney has pointed to a decline in immigration numbers as the reason for the current economic slump. There is truth to that, as immigration does help the economic bottom line for a country if not viewing the issue from a per-capita basis. Let’s hope Carney isn’t implying that we must return to a state of mass immigration, though, as it only papers over the underlying economic challenges in Canada and comes with many side effects.

During Justin Trudeau’s tenure, mass immigration kept Canada’s economy from slipping into a recession. As long as you pump people in, the GDP remains steady. The problem is, you end up with a fast-growing population with a slow-growing economic pie. The economy grows, but the share of GDP per capita remains flat or declines. This means people are getting poorer.

In 2014, Canada’s GDP per capita was US$51,025 and the American GDP per capita was $55,264. In 2025, Canada’s GDP per capita was US$55,765, while the American GDP per capita had grown to $89,991. Over a period of 11 years, Canada’s GDP per capita has grown by 9 percent while its southern neighbours saw a growth of 63 percent. It’s a chilling difference in wealth between two countries that had recently been nearly equal in that regard.

Another contributor to slow GDP per capita growth was the massive addition of workers in the public sector. Hiring more civil servants can help keep unemployment numbers at bay, but it turns into a drag on the private sector, which ultimately must pay the bills. Between 2015 and 2026, the federal public sector grew by an eye-popping 39.3 percent. Not only must the hiring be frozen, but Canada must start reducing the size of the government.

Canada must have organic, economic growth spawned through local private industries if it is to turn around its gloomy economic outlook.

To begin with, the prime minister must find a resolution to the trade conflict with the United States, as difficult as this task can be. The trade war is harming Canada terribly. It may be an exercise in futility, but the prime minister still must try with all he has.

Next, Carney must start taking solid action to make Canada a better place to do business. Regulations and taxes are stifling domestic entrepreneurs and chilling foreign investment. According to RBC, Canada lost over $1 trillion in investment to other countries since 2015. This was directly due to the country’s poor investment climate.

Investors don’t want to see more offices set up to ostensibly fast-track approvals of projects. The Major Projects Office was set up last August by the federal government, and it is moving at as glacial a pace as any other bureaucratic office. This only scares more investment away.

No more MOUs. No more offices. No more committees. The prime minister must directly guarantee that some economic projects will be approved and able to start working within months, not years. This includes resource projects, even if it means battles with indigenous activists and environmental groups, and it means telling some premiers they can’t hinder development any longer.

Canada has been blessed with an abundance of resources and could be one of the wealthiest nations on earth if the federal government would let it happen.

Carney inherited an economic mess from his predecessor. He has been the prime minister for over a year now, though, and people expect to see some positive economic gains. The technical recession could be a warning shot that will knock the government onto a course of economic responsibility, or it could be the beginning of a longer economic downturn.

The responsibility is in Mark Carney’s hands, and he can’t afford to slow-roll.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.