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Is Canada\u2019s weak productivity really an \u201cemergency?\u201d<\/p>\n
That was a question raised by a panel of experts Wednesday after Carolyn Rogers, senior deputy governor of the Bank of Canada, gave a speech earlier in the week raising the alarm about Canada\u2019s lagging productivity level and its effect on inflation.<\/p>\n<\/div>\n
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Frances Donald, global chief economist and strategist at Manulife Investment Management, said that while it will be important to have a conversation about productivity over the next few years,\u00a0 she believes the central bank has bigger priorities in the short term.<\/p>\n<\/div>\n
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\u201cIt is not the most urgent issue facing Canada in the next year,\u201d Frances told the economic panel hosted by Bloomberg in Toronto.<\/span><\/p>\n Donald noted the timing of Rogers\u2019 warning, which comes as the country heads into what is going to be an \u201cextremely challenging time.\u201d<\/p>\n \u201cWe\u2019re not going to be talking about productivity growth,\u201d Donald said, adding that how high the unemployment rate will go and how fast interest rates come down will be more urgent topics. Bloomberg journalist Tom Keene, who moderated the panel, said he was \u201cthunderstruck\u201d by Rogers\u2019 speech out of Halifax the previous day.<\/p>\n \u201cI\u2019ve never seen the urgency over this strange word: productivity,\u201d the Bloomberg host said.<\/p>\n David Rosenberg, founder and president of independent research firm Rosenberg Research & Associates Inc., told the panel the government sector is crowding out private investment and that is impairing productivity.<\/p>\n Government now accounts for around 26 per cent of Canada\u2019s economy, he said, while the share of GDP taken up by business spending, which is the prime driver of productivity, has declined to a mere eight per cent.\u00a0 Article content<\/p>\n \u201cThere\u2019s been no growth for two decades in total factor productivity in Canada,\u201d said Rosenberg, adding that the most up-to-date quarterly data <\/span>on labour productivity is negative 0.6 per cent in Canada, while the United States is growing by 2.6 per cent. <\/span><\/p>\n He said the root of productivity growth is private sector capital stock, which has stagnated in this country in recent decades.<\/p>\n \u201cThat\u2019s what has to change,\u201d he said.<\/p>\n Recommended from Editorial<\/p>\n
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