A Critical Juncture: Assessing Canada's Productivity Performance and Future Prospects

It is widely acknowledged that Canada has faced long-standing issues with productivity growth, both in comparison to its past performance and relative to other advanced economies. Additionally, it is recognized that as the transformation brought on by population aging continues, improvements in the living standards of Canadians will increasingly depend on productivity growth. This situation arises at a time when Canada, along with the global economy, is at the forefront of major structural transformations, including the green transition, the realignment of global trade, and the increasing digitization and use of AI. The necessity to adapt to the scale and scope of these transformations will create pressures for all economic actors to make renewed efforts to address Canada’s longstanding productivity challenges. To better understand the direction of Canada’s future productivity growth, this article chronicles Canada's productivity growth over recent decades and highlights key structural factors that have likely constrained Canada’s productivity performance. We then explore how these factors might shape the trajectory of productivity growth in the context of these impending structural transformations and identify areas where further research should be prioritized.