Economic and Social Reports
Canada’s gross domestic product per capita: Perspectives on the return to trend

Release date: April 24, 2024

DOI: https://doi.org/10.25318/36280001202400400001-eng

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Introduction

Slower economic growth over the past year and near-record population increases fuelled by temporary and permanent immigration have put the spotlight on recent trends in Canada’s gross domestic product (GDP) per capita. Real GDP per capita has now declined in five of the past six quarters and is currently near levels observed in 2017. Recent reports by Porter (2024), Ercolao (2023), and Marion and Ducharme (2024) have all stressed the trend towards weaker per capita growth, highlighting its negative implications for living standards and wage growth. Recent declines in per capita output have also brought concerns over Canada’s weak productivity performance to the fore, since historically, much of the long-term growth in GDP per capita has reflected sustained improvements in labour productivity.

Economic activity has slowed markedly during the past year as businesses and households continued to adjust to higher interest rates. Real GDP grew 1.1% in 2023, its slowest annual pace since lower oil prices weighed on growth in 2016, excluding the COVID-19 pandemic-related decline in 2020. Growth in 2023 was driven primarily by increases in exports and household spending, while lower business investment and declines in residential construction weighed on gains. As of late 2023, real output was 4.4% above pre-pandemic levels observed in the fourth quarter of 2019.

While the pace of economic activity has slowed, Canada’s population continued to expand rapidly. During 2023, Canada’s population grew 3.2%, an increase of over 1,271,000 people, roughly equivalent to the size of Calgary (Statistics Canada, 2022). With population growth outpacing output growth, GDP per capita has trended lower and is now 2.5% below pre-pandemic levels.

This article provides some additional perspective on the extent to which recent declines in GDP per capita represent a departure from the long-term trend in per capita growth, while highlighting factors that may effectively bolster per capita growth through improvements in business productivity. Drawing on recent research at Statistics Canada that examines the link between investment, competition and productivity, the article provides a guide to understanding how Canada fell behind and how it can get back to trend.

Gross domestic product per capita: Returning to trend is no small task

GDP per capita is widely used to gauge differences in living standards across countries. Higher levels of per capita output are generally found in more developed economies with advanced infrastructure, better health care and education systems, and higher levels of access to technologies and innovation. Workers in countries with higher per capita output tend to be more productive and earn higher wages (Leung  &  Macdonald, 2022). While trends in GDP per capita yield valuable insights into changes in average incomes, they do not capture other dimensions of socioeconomic progress, including changes in income inequality or environmental sustainability. Accordingly, it is important to examine GDP per capita along with other indicators when conducting comprehensive assessments of economic and social well-being.

Chart 1 presents Canada’s real GDP per capita over the last four decades, along with a measure of long‑term trend growth (and a linear extrapolation of the long-term trend out to 2033). Since 1981, real GDP per capita has grown at an average annual rate of 1.1%, increasing from about $36,900 per person to $58,100 per person in inflation-adjusted dollars. The shock of the COVID-19 pandemic, coupled with falling per capita output in recent quarters, has left real GDP per capita 7% below its long-term trend, equating to a decline of about $4,200 per person.Note To return to its pre-pandemic trend over the next decade, GDP per capita would need to grow at an average annual rate of 1.7% per year.

Chart 1 : Gross domestic product (GDP) per capita return to trend scenario analysis

Data table for Chart 1 
Data table for chart 1
Table summary
This table displays the results of Data table for chart 1 Gross domestic product per capita, Trend in gross domestic product per capita and Back to trend in 10 years scenario, calculated using dollars units of measure (appearing as column headers).
Gross domestic product per capita Trend in gross domestic product per capita Back to trend in 10 years scenario
dollars
1981
Q1 37,415 36,376 Note ...: not applicable
Q2 37,720 36,528 Note ...: not applicable
Q3 37,250 36,680 Note ...: not applicable
Q4 36,930 36,832 Note ...: not applicable
1982
Q1 36,421 36,984 Note ...: not applicable
Q2 35,911 37,136 Note ...: not applicable
Q3 35,486 37,288 Note ...: not applicable
Q4 35,052 37,440 Note ...: not applicable
1983
Q1 35,555 37,592 Note ...: not applicable
Q2 36,174 37,744 Note ...: not applicable
Q3 36,485 37,896 Note ...: not applicable
Q4 36,841 38,048 Note ...: not applicable
1984
Q1 37,408 38,200 Note ...: not applicable
Q2 38,048 38,352 Note ...: not applicable
Q3 38,111 38,503 Note ...: not applicable
Q4 38,600 38,655 Note ...: not applicable
1985
Q1 39,126 38,807 Note ...: not applicable
Q2 39,171 38,959 Note ...: not applicable
Q3 39,565 39,111 Note ...: not applicable
Q4 40,055 39,263 Note ...: not applicable
1986
Q1 39,961 39,415 Note ...: not applicable
Q2 40,103 39,567 Note ...: not applicable
Q3 40,029 39,719 Note ...: not applicable
Q4 39,607 39,871 Note ...: not applicable
1987
Q1 40,416 40,023 Note ...: not applicable
Q2 40,794 40,175 Note ...: not applicable
Q3 41,260 40,327 Note ...: not applicable
Q4 41,643 40,479 Note ...: not applicable
1988
Q1 42,154 40,630 Note ...: not applicable
Q2 42,406 40,782 Note ...: not applicable
Q3 42,234 40,934 Note ...: not applicable
Q4 42,301 41,086 Note ...: not applicable
1989
Q1 42,632 41,238 Note ...: not applicable
Q2 42,616 41,390 Note ...: not applicable
Q3 42,567 41,542 Note ...: not applicable
Q4 42,288 41,694 Note ...: not applicable
1990
Q1 42,600 41,846 Note ...: not applicable
Q2 42,269 41,998 Note ...: not applicable
Q3 41,778 42,150 Note ...: not applicable
Q4 41,233 42,302 Note ...: not applicable
1991
Q1 40,571 42,454 Note ...: not applicable
Q2 40,658 42,606 Note ...: not applicable
Q3 40,554 42,757 Note ...: not applicable
Q4 40,495 42,909 Note ...: not applicable
1992
Q1 40,446 43,061 Note ...: not applicable
Q2 40,366 43,213 Note ...: not applicable
Q3 40,439 43,365 Note ...: not applicable
Q4 40,523 43,517 Note ...: not applicable
1993
Q1 40,695 43,669 Note ...: not applicable
Q2 40,969 43,821 Note ...: not applicable
Q3 41,240 43,973 Note ...: not applicable
Q4 41,270 44,125 Note ...: not applicable
1994
Q1 41,807 44,277 Note ...: not applicable
Q2 42,312 44,429 Note ...: not applicable
Q3 42,717 44,581 Note ...: not applicable
Q4 42,885 44,733 Note ...: not applicable
1995
Q1 43,212 44,884 Note ...: not applicable
Q2 43,127 45,036 Note ...: not applicable
Q3 43,050 45,188 Note ...: not applicable
Q4 43,086 45,340 Note ...: not applicable
1996
Q1 43,074 45,492 Note ...: not applicable
Q2 43,282 45,644 Note ...: not applicable
Q3 43,504 45,796 Note ...: not applicable
Q4 43,704 45,948 Note ...: not applicable
1997
Q1 44,225 46,100 Note ...: not applicable
Q2 44,623 46,252 Note ...: not applicable
Q3 45,019 46,404 Note ...: not applicable
Q4 45,320 46,556 Note ...: not applicable
1998
Q1 45,908 46,708 Note ...: not applicable
Q2 45,854 46,859 Note ...: not applicable
Q3 46,156 47,011 Note ...: not applicable
Q4 46,663 47,163 Note ...: not applicable
1999
Q1 47,461 47,315 Note ...: not applicable
Q2 47,766 47,467 Note ...: not applicable
Q3 48,377 47,619 Note ...: not applicable
Q4 48,909 47,771 Note ...: not applicable
2000
Q1 49,619 47,923 Note ...: not applicable
Q2 50,092 48,075 Note ...: not applicable
Q3 50,454 48,227 Note ...: not applicable
Q4 50,392 48,379 Note ...: not applicable
2001
Q1 50,609 48,531 Note ...: not applicable
Q2 50,626 48,683 Note ...: not applicable
Q3 50,412 48,835 Note ...: not applicable
Q4 50,538 48,986 Note ...: not applicable
2002
Q1 51,211 49,138 Note ...: not applicable
Q2 51,376 49,290 Note ...: not applicable
Q3 51,644 49,442 Note ...: not applicable
Q4 51,776 49,594 Note ...: not applicable
2003
Q1 52,017 49,746 Note ...: not applicable
Q2 51,826 49,898 Note ...: not applicable
Q3 51,867 50,050 Note ...: not applicable
Q4 52,069 50,202 Note ...: not applicable
2004
Q1 52,383 50,354 Note ...: not applicable
Q2 52,889 50,506 Note ...: not applicable
Q3 53,356 50,658 Note ...: not applicable
Q4 53,575 50,810 Note ...: not applicable
2005
Q1 53,701 50,962 Note ...: not applicable
Q2 53,978 51,113 Note ...: not applicable
Q3 54,459 51,265 Note ...: not applicable
Q4 54,812 51,417 Note ...: not applicable
2006
Q1 55,186 51,569 Note ...: not applicable
Q2 55,086 51,721 Note ...: not applicable
Q3 55,070 51,873 Note ...: not applicable
Q4 55,103 52,025 Note ...: not applicable
2007
Q1 55,392 52,177 Note ...: not applicable
Q2 55,811 52,329 Note ...: not applicable
Q3 55,845 52,481 Note ...: not applicable
Q4 55,727 52,633 Note ...: not applicable
2008
Q1 55,687 52,785 Note ...: not applicable
Q2 55,760 52,937 Note ...: not applicable
Q3 56,015 53,089 Note ...: not applicable
Q4 55,157 53,240 Note ...: not applicable
2009
Q1 53,824 53,392 Note ...: not applicable
Q2 53,109 53,544 Note ...: not applicable
Q3 53,160 53,696 Note ...: not applicable
Q4 53,573 53,848 Note ...: not applicable
2010
Q1 54,141 54,000 Note ...: not applicable
Q2 54,293 54,152 Note ...: not applicable
Q3 54,488 54,304 Note ...: not applicable
Q4 54,895 54,456 Note ...: not applicable
2011
Q1 55,258 54,608 Note ...: not applicable
Q2 55,255 54,760 Note ...: not applicable
Q3 55,833 54,912 Note ...: not applicable
Q4 56,084 55,064 Note ...: not applicable
2012
Q1 56,024 55,215 Note ...: not applicable
Q2 56,083 55,367 Note ...: not applicable
Q3 55,963 55,519 Note ...: not applicable
Q4 55,883 55,671 Note ...: not applicable
2013
Q1 56,307 55,823 Note ...: not applicable
Q2 56,510 55,975 Note ...: not applicable
Q3 56,773 56,127 Note ...: not applicable
Q4 57,158 56,279 Note ...: not applicable
2014
Q1 57,193 56,431 Note ...: not applicable
Q2 57,595 56,583 Note ...: not applicable
Q3 57,960 56,735 Note ...: not applicable
Q4 58,162 56,887 Note ...: not applicable
2015
Q1 57,813 57,039 Note ...: not applicable
Q2 57,597 57,191 Note ...: not applicable
Q3 57,645 57,342 Note ...: not applicable
Q4 57,491 57,494 Note ...: not applicable
2016
Q1 57,754 57,646 Note ...: not applicable
Q2 57,309 57,798 Note ...: not applicable
Q3 57,678 57,950 Note ...: not applicable
Q4 57,767 58,102 Note ...: not applicable
2017
Q1 58,404 58,254 Note ...: not applicable
Q2 58,883 58,406 Note ...: not applicable
Q3 58,663 58,558 Note ...: not applicable
Q4 58,676 58,710 Note ...: not applicable
2018
Q1 59,230 58,862 Note ...: not applicable
Q2 59,527 59,014 Note ...: not applicable
Q3 59,555 59,166 Note ...: not applicable
Q4 59,396 59,318 Note ...: not applicable
2019
Q1 59,415 59,469 Note ...: not applicable
Q2 59,905 59,621 Note ...: not applicable
Q3 59,783 59,773 Note ...: not applicable
Q4 59,621 59,925 Note ...: not applicable
2020
Q1 58,304 60,077 Note ...: not applicable
Q2 51,783 60,229 Note ...: not applicable
Q3 56,455 60,381 Note ...: not applicable
Q4 57,517 60,533 Note ...: not applicable
2021
Q1 58,298 60,685 Note ...: not applicable
Q2 57,990 60,837 Note ...: not applicable
Q3 58,812 60,989 Note ...: not applicable
Q4 59,406 61,141 Note ...: not applicable
2022
Q1 59,797 61,293 Note ...: not applicable
Q2 60,178 61,445 Note ...: not applicable
Q3 60,056 61,596 Note ...: not applicable
Q4 59,413 61,748 Note ...: not applicable
2023
Q1 59,461 61,900 Note ...: not applicable
Q2 59,193 62,052 Note ...: not applicable
Q3 58,590 62,204 Note ...: not applicable
Q4 58,111 62,356 58,111
2024
Q1 Note ...: not applicable 62,509 58,356
Q2 Note ...: not applicable 62,662 58,603
Q3 Note ...: not applicable 62,816 58,850
Q4 Note ...: not applicable 62,970 59,098
2025
Q1 Note ...: not applicable 63,124 59,348
Q2 Note ...: not applicable 63,279 59,598
Q3 Note ...: not applicable 63,434 59,850
Q4 Note ...: not applicable 63,590 60,102
2026
Q1 Note ...: not applicable 63,745 60,356
Q2 Note ...: not applicable 63,902 60,610
Q3 Note ...: not applicable 64,058 60,866
Q4 Note ...: not applicable 64,215 61,123
2027
Q1 Note ...: not applicable 64,373 61,381
Q2 Note ...: not applicable 64,531 61,640
Q3 Note ...: not applicable 64,689 61,900
Q4 Note ...: not applicable 64,847 62,161
2028
Q1 Note ...: not applicable 65,006 62,424
Q2 Note ...: not applicable 65,166 62,687
Q3 Note ...: not applicable 65,325 62,952
Q4 Note ...: not applicable 65,486 63,217
2029
Q1 Note ...: not applicable 65,646 63,484
Q2 Note ...: not applicable 65,807 63,752
Q3 Note ...: not applicable 65,968 64,021
Q4 Note ...: not applicable 66,130 64,291
2030
Q1 Note ...: not applicable 66,292 64,562
Q2 Note ...: not applicable 66,455 64,835
Q3 Note ...: not applicable 66,618 65,108
Q4 Note ...: not applicable 66,781 65,383
2031
Q1 Note ...: not applicable 66,945 65,659
Q2 Note ...: not applicable 67,109 65,936
Q3 Note ...: not applicable 67,273 66,214
Q4 Note ...: not applicable 67,438 66,494
2032
Q1 Note ...: not applicable 67,603 66,774
Q2 Note ...: not applicable 67,769 67,056
Q3 Note ...: not applicable 67,935 67,339
Q4 Note ...: not applicable 68,102 67,623
2033
Q1 Note ...: not applicable 68,269 67,909
Q2 Note ...: not applicable 68,436 68,195
Q3 Note ...: not applicable 68,604 68,483
Q4 Note ...: not applicable 68,772 68,772

Per capita growth of this magnitude is ambitious and a marked departure from recent trends. It would be qualitatively similar to the 1.6% growth in GDP per capita that the United States has experienced since the onset of the pandemic. In 2023, real GDP in the United States grew by 3.3% (Bureau of Economic Analysis, 2024), vastly outpacing the 0.5% increase in the population, which is just now rebounding to pre-pandemic norms (United States Census Bureau, 2023). It should be noted that Canada has experienced extended periods of strong per capita growth in the past. From late 1991 to 2001, GDP per capita advanced at an average annual rate of 2.2%. As noted by Gu (2024), this coincided with sustained improvements in labour productivity, bolstered by the implementation of the Canada–U.S. Free Trade Agreement and the widespread adoption of information and communication technologies.

Raising per capita output requires higher productivity (and capital spending)

As Wang (2022) notes, improvements in real GDP per capita can come from three sources—increases in (1) labour productivity (a measure of how efficiently workers transform inputs into output), (2) work intensity (the number of hours worked per employee) and (3) the employment-to-population ratio (the percentage of the population that is working). Of the three, improvements in labour productivity are critical, since they accounted for 93% of the growth in GDP per capita over the four decades preceding the pandemic (Wang, 2022). Structural trends in the labour market related to work intensity and population aging suggest that productivity will remain the key driver of GDP per capita in the post‑pandemic era.

Improvements in productivity will require sustained increases in capital spending. New research by Gu  (2024) underscores the link between investment and productivity growth. Indeed, the amount of fixed capital invested per worker was the most important source of labour productivity growth over the past 30 years. After increasing during the 1990s until 2006, investment per worker began to decline, especially after the collapse in commodity prices in 2014 and 2015. As of 2021, investment per worker in business sector industries was about 15% lower than in 2006 (Chart 2). Weaker competition between firms following the mid 2000s—through rapidly decreasing firm entry rates—further limited the amount of investment spending per worker, accounting for 30% of the decline.

Chart 2 : Investment per worker, 2006 to 2021

Data table for Chart 2 
Data table for chart 2
Table summary
This table displays the results of Data table for chart 2 Investment per worker, calculated using index (2006 = 100) units of measure (appearing as column headers).
Investment per worker
index (2006 = 100)
2006 100.00
2007 93.39
2008 93.37
2009 86.58
2010 83.61
2011 89.77
2012 96.22
2013 98.61
2014 98.77
2015 103.23
2016 89.78
2017 84.09
2018 85.97
2019 91.85
2020 85.72
2021 81.85

Gu and Willox (2023) extend the link between competition and productivity growth. The authors show that higher levels of market power in the information and cultural services industry in Canada, an industry group that includes telecommunications, have contributed significantly to the productivity gap between Canada and the United States, noting that “eliminating market power associated with limited competitive intensity has the potential to increase investment, technical progress and innovation.”

Other studies have also stressed the productivity-enhancing effects of capital investment as a way of addressing declines in Canada’s GDP per capita. BMO Economics (2024) notes the extended declines in private investment in machinery and equipment (M&E) following the onset of lower commodity prices in 2014 and 2015, reporting that real spending on M&E currently remains below levels in 2008. Since investment levels pulled back in the mid-2010s, GDP per capita growth has averaged 0.1% per year. Porter (2024) further notes that real estate has been increasingly attractive to investors since the mid‑2000s, further detracting from M&E outlays, which, in nominal terms, are currently around two-fifths of the level of real estate investment. As rapid population expansion continues to impact housing affordability and supply (Bank of Canada, 2023), the current focus on residential investment can be expected to weigh on M&E outlays in the near term.

While capital outlays are important for economic growth, the pace of population growth warrants particular emphasis in the current context, especially when comparing current trends in GDP per capita with Canada’s past experience. The pace of population growth from 1991 to 2001, when GDP per capita was above its long-term trend, averaged 1.0%, about one-third of its current pace.

Some open questions on the productivity puzzle

Based on long-run projections from 2021 to 2060, the Organisation for Economic Co-operation and Development predicts Canada will have the lowest growth in GDP per capita of all member countries (Guillemette & Turner, 2021). Attracting higher levels of capital investment to spur productivity growth and lowering market-related barriers that limit innovation and competition may help bolster output growth and partly offset potential declines in relative living standards.

There are many open questions about the types of business investment that will lead to sustained improvements in productivity. Traditional sources of capital investment are shifting. From 2006 to 2021, the share of intangible assets such as software and data as a portion of total fixed assets on firms’ balance sheets rose from 8% to 17% (Gu, 2024). These intangible assets may prove to be important sources of productivity growth in the near term. Industries that relied heavily on digital technologies were much more resilient during the pandemic, with higher digital intensity in finance and wholesale trade industries contributing to productivity gains during the recovery period (Statistics Canada, 2022). The widespread adoption of digital services, accelerated by the pandemic, may bring about large-scale improvements in productivity similar to those that arose from the adoption of information and communication technologies in the 1990s. The ability of Canadian companies to harness the benefits of new competitive technologies related to artificial intelligence, robotics and digitalization will be critical to the link between investment and productivity in the coming years and potentially important contributors to changes in living standards.

Authors

Carter McCormack is with the Strategic Analysis, Publications and Training Division, Analytical Studies and Modelling Branch, at Statistics Canada. Weimin Wang is with the Economic Analysis Division, Analytical Studies and Modelling Branch, at Statistics Canada.

References

Bureau of Economic Analysis. 2024. Gross Domestic Productm Fourth Quarter and Year 2023 (Second Estimate). Catalogue number BEA 24-05.

Ercolao, M. 2023. Mind the Gap: Canada is Falling Behind the Standard-of-Living Curve. TD Economics. July 13, 2023.

Gravelle, T. 2023. Economic progress report: Immigration, housing and the outlook for inflation. Bank of Canada. December 7, 2023.

Gu, W. 2024. Investment Slowdown in Canada After the Mid-2000s: The Role of Competition and Intangibles. Analytical Studies Branch Research Paper Series. February 22, 2024.

Gu, W. & Willox, M. 2023. The post-2001 productivity growth divergence between Canada and the United States: The role of the information and cultural services industry. Economic and Social Reports. Ottawa: Statistics Canada. DOI: https://doi.org/10.25318/36280001202301200006-eng.

Guillemette, Y. & Turner, D. 2021. The long game: Fiscal outlooks to 2060 underline need for structural reform. OECD Economic Policy Papers. October 19, 2021.

Leung, D. & MacDonald, R. 2022. Real wages and productivity during the COVID-19 pandemic. Economic and Social Reports. October 27, 2022.

Marion, S. & Ducharme, A. 2024. Canada is caught in a population trap. National Bank of Canada. January 15, 2024.

Porter, D. 2024. Canadian Growth: Time for a Rethink. BMO Economics, March 8, 2024.

Statistics Canada. 2022. Research to Insights: Investment, Productivity and Living Standards. Catalogue number 11-632-X.

Statistics Canada. 2022. Canada’s fastest growing decreasing municipalities from 2016 to 2021. Catalogue number 98-200-X.

United States Census Bureau. 2023. U.S. Population Trends Return to Pre-Pandemic Norms as More States Gain Population. Catalogue number CB23-217.

Wang, W. 2022. The COVID-19 pandemic and gross domestic product per capita growth in Canada. Economics and Social Reports. May 25, 2022.

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