In a somewhat downbeat report, the Conference Board highlights the following in their long-term economic forecast:
- Despite the improving global situation, Canada’s near-term performance is being held back by significant fiscal restraint. A return to full employment will not occur until 2016.
- Beyond 2016, economic growth will align with easing potential output growth, a result of the exodus of baby boomers from the labour market.
- Steady growth in global demand for energy and other commodities will continue to stimulate investment and production in Canada—a favourable condition that will also keep our currency strong in relation to the greenback.
- Strong immigration will not reverse Canada’s aging trend. By 2035, Canada’s population will reach 44 million, roughly 10 million more than today.
- The recession has left the federal and many provincial governments mired in red ink. Provincial governments will find it particularly difficult to correct the situation as aging boomers put pressure on health care budgets. At the same time, the federal government is expected to play a smaller direct role in tomorrow’s economy.
Canada’s economy is expected to grow 2.3% this year and average 2.7% over the next four years. After 2016, growth will slow to just above 2% due to a tightening labour market.
Whether it becomes more challenging for employers to find workers that match their needs will depend on the labour market itself — changes to immigration policies and perhaps older Canadians needing to delay retirement to make money. The report suggests that boomers need to make back money lost during bad investment years. And here I thought it was because boomers were racking up too much debt.