Is Canada’s GDP growth worse than half the G7?
Andrew Scheer said the Liberals' deficit spending has run the domestic economy aground compared to other six countries in the G7 group of advanced economies
OTTAWA — “We look at our partners around the world and growth is higher in over half the G7 countries than it is here at home in Canada.” — Conservative Leader Andrew Scheer in the House of Commons, Feb. 3.
Andrew Scheer and Prime Minister Justin Trudeau tangled in Feb. 3’s question period over the Liberals’ economic management.
Scheer said the Liberals’ deficit spending has run the domestic economy aground compared to other six countries in the G7 group of advanced economies. Trudeau said all that spending is helping the economy grow.
“Mr. Speaker, the facts are exactly the opposite,” Scheer said.
“Mr. Speaker, the Conservatives consistently try to twist the truth,” Trudeau retorted.
Time for the Baloney Meter to count dollars and make sense.
This claim earns a rating of “some baloney.” Here’s why.
The most common measure of economic growth is percentage increases in gross domestic product, which is a measure of the overall value of nation’s economy.
Scheer didn’t put a timeline on his charge of economic woe but his office did in response to a question from The Canadian Press. The Conservatives pointed to quarterly GDP growth figures for the third quarter of 2019 that put Canada behind the United States, the U.K. and Japan. The 0.3% economic expansion recorded in that quarter was tied with France, and ahead of the 0.1% for Italy and Germany.
Some countries have reported their economic growth rates for the last three months of 2019 but Canada hasn’t yet. That’s expected at the end of February.
But last month, the Bank of Canada said it expected to register a slowdown at the end of last year. It estimated annual growth to be 1.6% in 2019 and 2020, and then two per cent in 2021.
The International Monetary Fund tracks annual percentage increases in GDP. Based on those figures, Canada’s growth in 2016 — the first full year of the Trudeau Liberals’ government — was 1.1%, according to the IMF, which was the same figure recorded in Italy and France and half a percentage point above Japan, which finished last in the G7 that year.
But since, Canada has either led G7 countries — once, in 2017 — or been second in annual growth behind the United States.
Quarterly numbers, generally, are more volatile than annual figures and can be subject to temporary changes in demand, energy prices, exchange rates or situations in other countries, among others, says Minjoon Lee, an assistant professor in Carleton University’s economics department.
The third-quarter numbers Scheer used as the foundation for his comment do put Canada below three other nations in the G7. But one quarter earlier, Canada’s growth was tops in the G7.
“The measure is very volatile, as it only captures what happened in the last quarter. This can be very sensitive to any external (and temporary) shocks that happened to the Canadian economy,” Lee says in an email.
Comparing quarterly numbers among countries can introduce bias because key national industries can operate on different cycles, says Troy Joseph, an instructor in Carleton’s economics department. For instance, auto sales decline in the fall and winter in Canada.
“It isn’t uncommon to look at GDP quarterly measure, but to use that as an annual growth rate is a little misleading because we can see there is a big difference,” Joseph says.
Scheer’s use of the OECD numbers are accurate on the surface. But a digging deeper into the figures reveals that his comment was a tad simple for a more complex scenario. For those reasons, his statement has “some baloney” because important details are missing.