Although Canada may not be in recession from a technical standpoint, some economists believe that the declining trend in per capita output in Canada is similar to previous economic downturns. Therefore, economists suggest that decision-makers need to analyze the overall positive economic data released by Canada in recent quarters. On Wednesday, Bank of Canada Governor Stephen Poloz mentioned this point when announcing the second consecutive interest rate cut and said that the Bank of Canada needs to “simultaneously consider” overall economic growth and per capita output when making interest rate decisions to analyze economic conditions. “Families are actually cutting back on spending,” he said at a press conference, “but the increasing number of families due to high immigration rates has boosted GDP (gross domestic product).” Poloz said that from a business perspective, it is not important whether demand comes from individual households or more households. Although interest rates are high, the overall economic scale has continued to grow in the past few years and has barely avoided consecutive quarterly declines, which is technically referred to as a recession definition. But economists attribute this to the new wave of consumers brought in by more than two million new immigrants to Canada in the past two years. The economists at the Royal Bank of Canada said in a report last week that consumer spending accounts for more than half of GDP, and many new immigrants are also productive workers who increase economic production capacity. GDP can be used to measure the total output of a country's production of goods and services during a specific period of time. It can also measure income obtained from production. Per capita GDP is calculated by dividing the country's total GDP by its total population. Canada's per capita GDP has declined in six of the past seven quarters. Benjamin Tal, an economist at the Canadian Imperial Bank of Commerce, said that the situation of GDP growth but per capita GDP decline is unsustainable because it means that economic growth is mainly due to population growth rather than productivity. Canada's productivity figures have also declined in recent quarters. “I think population growth is entering the consciousness of decision-makers,” he said. Robert Kavcic, an economist at BMO Capital Markets, said that per capita data can show “more truth” than overall data, such as cutting expenses. “This will support the argument for a Bank of Canada interest rate cut,” he said, “and perhaps there is more weakness below the surface.” However, Rebekah Young, an economist at the Bank of Nova Scotia, said that the debate over per capita GDP versus GDP has “overly complicated” the risk of communicating monetary policy information. “This is a symptom rather than a diagnosis of the economic situation and its impact on inflation and interest rates,” she said. “Ultimately, the sources and driving factors of supply and demand are important to the inflation outlook. Interest rate decisions are based on the net impact of these factors.”
Bank of Canada Governor Stephen Poloz mentioned this when announcing the second consecutive interest rate cut on Wednesday and said that the Bank of Canada needs to “simultaneously consider” overall economic growth and per capita output when making interest rate decisions to analyze economic conditions.
“Families are actually cutting back on spending,” he said at a press conference, “but the increasing number of families due to high immigration rates has boosted GDP (gross domestic product).”
Poloz said that from a business perspective, it is not important whether demand comes from individual households or more households.
Although interest rates are high, the overall economic scale has continued to grow in the past few years and has barely avoided consecutive quarterly declines, which is technically referred to as a recession definition. But economists attribute this to the new wave of consumers brought in by more than two million new immigrants to Canada in the past two years.
The economists at the Royal Bank of Canada said in a report last week that consumer spending accounts for more than half of GDP, and many new immigrants are also productive workers who increase economic production capacity.
GDP can be used to measure the total output of a country's production of goods and services during a specific period of time. It can also measure income obtained from production. Per capita GDP is calculated by dividing the country's total GDP by its total population.
Canada's per capita GDP has declined in six of the past seven quarters.
Benjamin Tal, an economist at the Canadian Imperial Bank of Commerce, said that the situation of GDP growth but per capita GDP decline is unsustainable because it means that economic growth is mainly due to population growth rather than productivity. Canada's productivity figures have also declined in recent quarters. “I think population growth is entering the consciousness of decision-makers,” he said.
“I think population growth is entering the consciousness of decision-makers,” he said.
Robert Kavcic, an economist at BMO Capital Markets, said that per capita data can show “more truth” than overall data, such as cutting expenses.
“This will support the argument for a Bank of Canada interest rate cut,” he said, “and perhaps there is more weakness below the surface.”
However, Rebekah Young, an economist at the Bank of Nova Scotia, said that the debate over per capita GDP versus GDP has “overly complicated” the risk of communicating monetary policy information.
“This is a symptom rather than a diagnosis of the economic situation and its impact on inflation and interest rates,” she said. “Ultimately, the sources and driving factors of supply and demand are important to the inflation outlook. Interest rate decisions are based on the net impact of these factors.”