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Canada’s Economy Remains “B” Grade Despite Turmoil

Brenda Lafleur, Program Director, Forecasting and Analysis
August 4, 2009

Amid the financial turmoil of 2008, Canada maintained its “B” grade in economic performance and its 11th-place ranking among 17 of the wealthiest countries in the world in the Conference Board’s annual How Canada Performs1 benchmarking analysis. This low “B” grade, however, still leaves Canada in the back half of the class when compared with its peers. And Canada continues to lag the leading countries on key economic indicators.

Since the Conference Board began international benchmarking in 1996, there has never been another year when the relative rankings changed so dramatically.

Canada’s relative position did not change in 2008—despite rising unemployment, falling income per capita, slowing gross domestic product (GDP) growth, and declining labour productivity—because other countries were even harder hit by the global economic crisis. Since the Conference Board began international benchmarking in 1996, there has not been another year when the relative rankings changed so dramatically.

“B” Student

Canada’s “B” grade is based on its performance on eight economic indicators:

Canada maintained an overall “B”—despite six “C”s—because its “A” on inflation, “B” on GDP growth, and relatively high “C” scores pulled up its average grade in comparison with that of peer countries with more uneven scores. Canada also increased its share of global outward FDI relative to its share of global GDP, which further bolstered its ranking.

Following the Leaders

Canada’s grades, however, still fell well short of those of the top-performing economies among the 17 countries compared in the analysis. Norway moved from third place in 2007 to first place in 2008. Norwegians enjoy a per capita income of nearly US$9,200 more than that of Canadians. Norway was the only country to receive an “A” grade for employment growth last year, and it tied the Netherlands for second place on GDP growth, behind Australia.

Reversal of Fortunes

Rankings for several countries changed dramatically between 2007 and 2008.

  • Australia (12th place to 6th) and France (15th place to 9th) each rose six spots in the rankings, and Austria moved up nine spots (13th place to 4th).
  • Ireland (1st place to 17th) is reeling from the global economic crisis, and from a meltdown in its domestic property market and construction sector. The Irish economy contracted by 2.7 per cent in 2008, labour productivity and employment fell, and FDI—the main stimulus for Ireland’s economic miracle of the past decade—evaporated. Ireland’s fall from grace, however, should not detract from the real gains it has made over the past two decades. Ireland remains the third-wealthiest country—as measured by income per capita—among the comparator countries.
  • Finland (6th place to 15th) suffered a slide in late 2008 that was steeper than the decline during its early 1990s recession. A drop-off in exports—particularly to Russia, due to lower Russian oil and gas revenues—caused Finnish industrial output to decline by 16 per cent between December 2007 and December 2008.
1 How Canada Performs is the Conference Board’s annual benchmarking analysis, which the Board has conducted since 1996. “The Economy” is one of six categories in which Canada is compared with 16 other developed countries. This Economy report card provides Canada’s global ranking in 2008, the start of the recession. Canada’s forecast economic rankings for 2009 and 2010 will be published this summer. Other domains—Health, Society, Innovation, Environment, and Education and Skills—will be updated later this year.

Brenda Lafleur
Brenda Lafleur
Program Director
Forecasting and Analysis
613-526-3090 ext. 349

Related Publications
Canadian Outlook Long-Term Economic Forecast: 2009
Canadian Outlook Economic Forecast: Summer 2009
World Outlook Global Economic Trends and Prospects: Summer 2009