Canada's Business Investment Slump Hits Productivity

Economists agree that productivity drives income growth over time. Canada's annual productivity growth has slowed in recent years to less than 1%, its lowest on record since 1961, and a major reason why real GDP per capita has also plummeted to historic lows.

Reviving Canada's economic growth means boosting productivity. Lower business investment is the main reason for this slowdown over the past decade. Carolyn Rogers, former Bank of Canada deputy governor, noted that 'when you compare Canada's recent productivity record with that of other countries, what really stands out is how much we lag on investment.'

Canada's business investment has been weak, falling 6.4% since the end of 2014. In contrast, U.S. business investment surged 43.2% over the same period.