For one thing, in recent weeks gaggles of economists have been flocking to downgrade their economic growth forecasts for the coming year to anemic levels in advance of Finance Minister Jim Flaherty’s impending budget.
For another, a Conference Board of Canada report card released today looks back to 2008 and finds that this country has been running no better than slightly above average in a mediocre pack.
The report card gives Canada a B grade overall — sixth place in the 16-country analysis. That’s up from eleventh place in 2008, the last time the board compiled such a ranking, but this improvement should not be regarded as unequivocal good news.
“It is more a reflection of weakness among its peers than of a stellar Canadian economy,” the board notes.
“This B grade should be viewed as relative because Canada fares poorly when compared with the top-performing economies,” stated senior vice-president and chief economist Glen Hodgson. “With the exception of inflation and employment growth, Canada ranks far below the best countries on all other economy indicators.”
Norway led the pack, followed by Australia — which also earned an A ranking — then Belgium, the United States (despite its rocky recovery) and Austria.
Canada’s strongest performance was in controlling inflation, the only one of eight categories where this country earned an A.
We were weakest in attracting foreign investment, where our score was D for dismal. It was only a little better, with C rankings, for investing in the global economy and, most importantly, for generating per capita income growth.
We were in the middle, mostly just slightly better than average, for GDP growth, labour productivity growth, the unemployment rate and employment growth.
Significantly, the analysis of economic wealth does not look merely at income per capita, although the amount of money people have in their pockets or purses is, of course, a key indicator of the economy’s health. It also looks at each country’s ability “to sustain living standards through public spending on education, health, and infrastructure, as well as through private and public savings that can be used to generate future income and to support future consumption.”
The Conference Board doesn’t spell out precisely how it arrived at its rankings, but this sustainability criteria must have helped push Norway to the head of the pack.
It’s easy to belittle Norway’s pace-setting performance as an unremarkable feat for a small country — its population is just five million — with the world’s eighth-largest oil production levels. But unlike in B.C. and the rest of Canada, where every government spends every cent of resource revenue it can get its hands on and still runs a deficit, the Norwegians have for decades saved their oil revenue in a fund that now totals more than $660 billion.
Thus, while it might be easier for the Norwegians to balance their books and forge ahead economically when they’ve got the earnings from a fund this large to draw on, it’s not because they took the easy way out.
There’s a lesson here for Canada.
Our current strategy — relying heavily on commodity sales to fuel our national prosperity, and hoping we get a good price — leaves us vulnerable to the vagaries of global economic forces, and we can expect serious downturns from time to time. This means when the economy is down, which is just when governments need more money, they have less. So if we want to see more stability and steady progress — to really earn some international bragging rights — we’ll need a lot more financial discipline than any government has demonstrated to date.
Original Article
Source: canada.com
Author: Don Cayo
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