Even in the hole, Canada trumps trading partners, but there is still work to do

Neil McKenty

July, 2010

One of our great prime ministers, Sir Wilfrid Laurier, reportedly said that the 20th century belonged to Canada. What would Laurier say today if he read the powerful numbers measuring Canada’s progress?

Consider the economy. Since July of last year, Canada has added more than 300,000 jobs. In May we added 25,000 jobs after piling up 109,000 in April. This brings the country’s unemployment rate down to 8.1 per cent, which is more than a full point better than the American rate.

The figures for Quebec are even better, at 7.9 per cent unemployment, which is below the national average, 8.1 per cent. Since last July, Quebec has added nearly 100,000 jobs.

The growth numbers from the Canadian economy are even more impressive. In the first quarter of 2010, the economy grew by 6.1 per cent. That’s on top of 4.9 per cent growth in the fourth quarter of last year – the two strongest consecutive trimesters in the last decade.

These figures show that the fundamentals of the Canadian economy are solid. Not only that, but Canada is in better economic shape than any other country of the G8. That applies even to the debt. Our debt at the end of the last fiscal year amounted to $47 billion, $6 billion less than Finance Minister Jim Flaherty forecast. So our national debt amounts to three per cent of GNP. That’s a lot less than some other heavyweights in the G8.

Look at the British deficit of $400 billion, 13 per cent of GDP. Or the American deficit of $1.6 trillion, which amounts to 10 per cent of GDP. Even in the hole, Canada is better off than our major trading partners.

And the rest of this year looks good. Private forecasters have raised their 2010 estimates for growth, saying the near-term outlook has “improved further” since a March survey. The inflation figures, too, are less worrisome.

Forecasters expect consumer price inflation of two per cent this year, well in line with the Bank of Canada’s target.

So what about Canada’s longer-term economic future? Some thoughts on that are outlined in a recent report called Open Canada, written by Edward Greenspon, formerly editor-in-chief of the Globe and Mail, who headed the panel that produced the report. The paper suggests that a once-in-a-century shift in world power is opening up a place for Canada on the world stage, but we have to step up and take it. The report points to a number of “game-changers” that have brought about that shift, including the relative economic decline in the United States; the growing economic role of China and India; an increasing global competition for resources, including energy, minerals, water and food; terrorism’s alteration of global security norms; and climate change.

“Open Canada has tremendous assets to achieve a global repositioning that advances our interests,” Greenspon writes. “What we lack are the strategies to leverage these interests to our best advantage. We need to get our policies right if we are going to situate ourselves in the sweet spot at the centre of global networks.”

This starts with smartening up about our love-hate relationship with the U.S. and becoming America’s indispensable ally, a pragmatic approach that does not have to mean marching in lockstep with Washington.

However, stepping up to the plate in Haiti and Afghanistan made Canada more relevant in the world and, by extension, Washington.

According to Greenspon, we must extend our networks around the world. “Canada can – indeed must – walk and chew gum at the same time. Most particularly, we need to be better friends with our best friend. And we need to make more friends in a world in which power, wealth and knowledge are accessible to all.”

The panel recommends that Canada invest in more innovation, find ways to make the oilsands environmentally friendly, and stop talking free trade while protecting our domestic producers with marketing boards.

Canada also needs to decide what our brand should be – clean energy superpower, international peacemaker and problem solver, Arctic power – and then work at becoming that thing.

The Open Canada report concludes: “We need to make a strong, credible and consistent case for the Canada we strive to be; otherwise we will allow others to define us – at best, as that nice country of little consequence, or at worst, as that dirty oil country or the little brother of the U.S. or that nation that clubs innocent baby seals. That is brand noise a country can do without.” On the basis of our strong economic performance – a vigorous recovery and solid banks – Canada held its head high at the recent G8 and G20 summits. Sir Wilfrid Laurier would be proud.