Canada’s economic growth beyond 2014 will be constrained by the exodus of the baby boom generation from the labour market, according to The Conference Board of Canada’s Canadian Outlook: Long-Term Economic Forecast.
“Canada’s near-term economic outlook is much brighter than it was just a few months ago,” says Pedro Antunes, director, national and provincial outlook. “Beyond 2014, however, economic growth will be restrained as the baby boomers leave the workforce. Labour shortages brought on by a wave of retirements will be the dominant economic trend until about 2030.”
Increased capital investment and improved productivity growth are key elements in sustaining strong economic performance over the long term horizon. Strengthening these areas will help generate income and revenues necessary to sustain prosperity and to help pay for public programs such as health care.
Over the medium term, Canada is expected to enjoy a robust increase in real gross domestic product (GDP) as the gap on economic potential caused by the recession is gradually closed. From 2012 to 2015, average real GDP growth of 3.4 per cent is forecast and the national unemployment rate is expected to fall below six per cent.
Tight labour markets support the strong immigration assumptions incorporated in this forecast. Annual immigration is projected to top out at just over 350,000 per year in the final three years of the forecast, 2028 to 2030. Strong immigration will not reverse Canada’s aging trend, but it will help keep total population growth relatively stable throughout the forecast period. By 2030, Canada’s population will reach 41.7 million, up from 33.6 million in 2009.
For the first time, the long-term forecast includes a baseline outlook for Canadian greenhouse gas (GHG) emissions to 2030. This outlook is based on the long-term economic forecast and emission intensity levels in industrial sectors and households between 1990 and 2007. This GHG emissions baseline scenario does not include the impact of recent climate change policies.
The baseline outlook estimates that under this scenario, GHG emissions in 2030 would increase by nearly 50 per cent over 2007 levels, from an estimated 724 megatonnes in 2007 to 1,080 megatonnes in 2030.
“As policies to mitigate climate change are introduced and implemented, the emissions intensities and energy mix should change,” says Antunes. “This forecast provides a baseline with which to evaluate policies to reduce GHG emissions.”
The Canadian Outlook: Long-term Economic Forecast has been produced by the Conference Board since 1992. Click here to view the newest version.