Ontario Chamber of Commerce
By: Dana Wagner on
Kevin O'Leary, Conservative Party member, at the Conservative Party convention on May 27, 2016
Growth was sluggish into 2016, but only below zero in monthly data. Looking at the longer-term picture – measured quarterly and annually – Canada’s growth is above zero.FactsCan Score: Misleading
Now a Conservative Party member, but not yet a leadership contender, Kevin O’Leary spoke at the recent party convention and gave a prognosis on Canada’s economy.
“In this country, we have zero economic growth,” O’Leary said.
O’Leary talks a lot about money, from his current gig on the reality investor program Shark Tank, to his past financial prime-time slot on CBC with the Lang and O’Leary Exchange, to several books on financial management. A perk of talking about money is that it can be measured. “I love to focus on things you can measure,” he quipped during the convention.
We do too. And luckily, we can measure economic growth.
The main measure of economic growth is real gross domestic product (GDP), and another that’s sometimes used is GDP per capita to account for population change.
On the first measure, and using different time periods since O’Leary didn’t specify one, growth is mostly above zero.
Beginning with annual numbers, real (adjusted for inflation) GDP grew 1.2 per cent in 2015, and the Bank of Canada projected it will be 1.7 per cent in 2016. There’s growth when you drill down to look at quarterly numbers too. The latest quarter on file is the first quarter of 2016, and it showed growth of 0.6 per cent.
The negative numbers appear in recent monthly data. There was negative growth of 0.2 per cent in March, preceded by a negative 0.1 per cent in February, but a positive figure for January lifted the overall first-quarter average.
This means that O’Leary is right, but only in the very short-term past. His statement misses quarterly growth, annual growth for 2015, and projected annual growth for the remainder of 2016 and coming years.
Taking a longer-term view either forward or back, O’Leary is wrong.
In the last five years, quarterly GDP growth hit zero during one quarter in 2012, and dipped below zero in the first two quarters of 2015. Otherwise, Canada’s economy saw only positive growth.
Source: Statistics Canada
Looking ahead, projections show continued growth for Canada. A May 2016 report from RBC Royal Bank concluded that “sustained strength in exports and consumer spending will more than offset the weakness in energy-related business investment in the second half of 2016 and throughout 2017.” The projected growth from the Bank of Canada is 2.3 per cent for 2017, and 2 per cent for 2018.
On the second measure, GDP per capita, there’s again annual growth. Constantine Angyridis, an economist at Ryerson University, used the rough population growth rate of 1 per cent per year to point out that annual GDP per capita (GDP divided by population) remains above zero. The 2015 figure becomes 0.2 per cent, and 2016 is 0.7 per cent.
The numbers are not high, but are not zero. “The Canadian economy is growing at a fairly sluggish rate,” Angyridis said. (He concluded that O’Leary got it wrong: “The statement is incorrect.”)
O’Leary is only correct in the short-term past, but the statement is misleading because it misses a larger growth picture that emerges when you cut the data several different ways – looking back, looking ahead, and looking at years or quarters.