GDP Growth Unadjusted for Population Change—a Misleading Measure of Canada’s Economic Progress
— Published on April 11, 2024
- Growth in Canada’s Gross Domestic Product (GDP) has been one of the indicators of the country’s economic performance most frequently cited by journalists, analysts, and politicians.
- This Research Bulletin shows that, given the large differences in population growth across developed economies, measurements of change in GDP that are presented in aggregate rather than per person are not useful for making international comparisons of economic performance.
- Between 2000 and 2023, Canada had the second highest rate of GDP growth in the G7. However, after an adjustment is made for population growth to measure GDP per person, Canada’s growth rate over this period is near the bottom of the group and well below the G7 average.
- Because rates of population growth vary from one time period to another, GDP shown in aggregate is also misleading in historical comparisons of growth rates. Growth in GDP per person, on the other hand, provides a more accurate comparison of economic performance: Canada’s economic growth per person has been lower since 2015 than it has been under any of Canada’s previous four long-serving prime ministers.
- Comparative analyses across time or countries that seek to use GDP to compare changes in productivity, quality of life, or nearly any other dimension of economic performance should adjust for changes in population by using GDP per person rather than aggregated GDP.
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