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Battered Economy Running Below Potential: Canada’s Potential Output Outlook to 2040 The Conference Board of Canada, 12 pages, February 2, 2021 Issue briefing

Battered Economy Running Below Potential: Canada’s Potential Output Outlook to 2040

The Conference Board of Canada, 12 pages, February 2, 2021
Issue briefing

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This annual economic forecast presents Canada's long-term potential output outlook. Document Highlights Potential output is forecast to expand at an average annual pace of 1.5 per cent between 2020 and 2040. Slower growth in the labour force and a gradual decline in the natural rate of unemployment will shape potential employment over the long term. Machinery and equipment investment will expand at a steady pace throughout much of the long term, helping to keep total capital stock elevated over the forecast. As the workforce shrinks over the course of the forecast, businesses will be encouraged to invest in productivity-enhancing technology to boost total factor productivity growth. With real output expected to outpace potential output over the next several years, the output gap is expected to close sometime around 2028.

This annual economic forecast presents Canada's long-term potential output outlook.

Document Highlights

Potential output is forecast to expand at an average annual pace of 1.5 per cent between 2020 and 2040.
Slower growth in the labour force and a gradual decline in the natural rate of unemployment will shape potential employment over the long term.
Machinery and equipment investment will expand at a steady pace throughout much of the long term, helping to keep total capital stock elevated over the forecast.
As the workforce shrinks over the course of the forecast, businesses will be encouraged to invest in productivity-enhancing technology to boost total factor productivity growth.
With real output expected to outpace potential output over the next several years, the output gap is expected to close sometime around 2028.

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