Economy Closely Tracks Potential Throughout Long Term: Canada’s Potential Output Outlook to 2045—November 2021

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

Document Highlights

Over the long term, actual GDP growth will be restrained by slowing growth in potential output, which is forecast to expand at an average annual pace of 1.5 per cent between 2021 and 2045.

Higher immigration will not completely reverse Canada’s aging trend, but it will help keep labour force growth steady in the later years of the forecast.

Greater capital spending on machinery and equipment will keep capital stock elevated over the long term.

Faced with a shrinking workforce, firms will be encouraged to invest in productivity-enhancing technology and the skills development of their workers to maintain solid growth in total factor productivity.

With real output expected to outpace potential output over the next several years, the output gap will largely close by the second half of 2022 and remain that.