Immigration Canada: Gross domestic product

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Canada keeps AAA credit rating

Canadian parliament from the Musée Canadienne ...

BY ERIC LAM, POSTMEDIA NEWS JULY 28, 2011

As the debt spectacle continues in Washington, Moody’s Investor Service renewed Canada’s AAA credit rating on Thursday.

While all eyes are on the United States as it tries to hammer out a deal to raise its borrowing limit by Aug. 2, avoid a debt default and a possible debt downgrade, Canada sailed through its annual credit checkup with flying colours.

Moody’s said the country’s high resiliency, government financial strength and low susceptibility to risk were key to the top marks.

Here’s a breakdown of the reasons why Moody’s says Canada deserves the highest possible credit rating:

Economic strength: Very high.

Canada missed the worst of the financial crisis because of the financial strength of its banks and only a mild downturn in the housing market.

The country had a stronger rebound from the recession, with a 3.2-per-cent rise in gross domestic product, compared with 2.9 per cent south of the border. Moody’s said monetary policy and Ottawa’s stimulus program helped the recovery.

There are important differences between the Canadian and U.S. economies that affected Moody’s evaluation of Canada’s strength, including the fact that trade in goods and services makes up more than half of Canada’s GDP, compared with less than one- third in the U.S. This points to a greater degree of openness in the economy, it said.

Canada also has lower federal debt and a stronger banking system and housing market, as well as a higher domestic saving rate, resulting in less reliance on external financial markets.

Institutional strength: Very high.

Fiscal discipline at the Bank of Canada, inflation control, government effectiveness and rule of law all rank highly.

Economic and fiscal policies have remained stable for the past 15 years under Liberal and Conservative governments. Some tax differences exist, but the overall goal of fiscal balance and declining debt has been a constant.

While the proportion of total government debt credited to provincial, territorial and local governments is the highest among major countries, and Moody’s judges the risk of the federal government having to step in to assist these governments with their debt payments as high, it said local ratings indicate little risk that such assistance would actually be needed.

Government financial strength: Very high.

This evaluation is based on a well-established pattern of budget surpluses at the federal level, except during exceptional circumstances such as the financial crisis, leading to declining government debt and debt ratios since the 1990s.

Susceptibility to event risk: Low.

The most important risks are related to the housing market and to separatism in Quebec, although the probability of either affecting Canada’s rating is quite low.

How is Canada Going to Handle the Debt from Baby Boomers in 2020?

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Image via Wikipedia“William Robson, CEO and president of the C.D. Howe Institute, reports that Canada will have a liability of $1.5 trillion over the next five decades”
By Pawan Shamdasani, Staff Writer

Canada is recognized for being one of the world’s most indebted countries today by the Fraser Institute. In the past decade, Canada’s national debt reached more than 70% of GDP, but since then successive finance ministers have managed to reduce it down through continued surpluses. However, as thousands of baby boomers approach the retirement line, this will fundamentally change the Canadian labour market and lead to a soaring federal budget deficit.

Since the 1950s, there has been a steady decline in Canada’s birth rate. Also, there are not enough immigrants arriving. “So the “providing ratio” — that is, the number of working-aged Canadians relative to those over 65 — will fall,” states Matthew McClearn, of Canadian Business magazine. Currently the ratio is 5:1, but experts expect it to decrease to half by 2040.

This will result in an erosion of the tax base as more retirees outnumber the young people who intend to replace them in the workforce. By the next decade, the number of retirees relative to those in the workforce will grow by 7%.

Government spending will rise as the graying population indulge themselves on pensions, health care benefits and old-age benefits, resulting in a fiscal squeeze for Ottawa and the provinces. At the moment, health, education and elderly and child benefits account for 15% of GDP. However, by 2056, these expenses will shoot up to more than 19%.

This represents almost $68 billion in additional government spending each year, which Canada is not prepared to absorb. William Robson, CEO and president of the C.D. Howe Institute, reports that Canada will have a liability of $1.5 trillion over the next five decades.

A combination of fiscal and non-fiscal measures will be necessary to tighten the demographic squeeze alongside policies to enhance labour productivity and make up for the declining workforce. Canada will also require more budgetary discipline which has enabled it to reduce its debt over the past 10 years.

A careful examination of the rising social costs for healthcare and public pensions will be likely as well. But it is clear that many young Canadians will have to work longer before retiring and pay higher taxes than previous generations.

“Permanent fiscal actions – either through increased taxes or reduced program spending, or some combination of both, will be needed to avoid ever-increasing government deficits,” says Kevin Page, parliamentary budget officer. He warns that if corrective measures are not implemented quickly, the problem will grow “exponentially.” If imposed after 10 years, the solution could cost about $30 billion in spending cuts or tax hikes.

These demographic pressures will possibly lead to a grim financial future. At the end of 2008, Canada’s federal debt was about $458 billion. However, Dale Orr, an independent forecaster, anticipates $150 billion in additional government debt until 2014-15 due to the financial crisis. He believes that the financial burden will not be as harsh as in the 1990s.

Christopher Ragan, an economics professor at McGill University, expects the demographic squeeze to be felt largely between 2020 and 2040. He claims that we could be left in a vulnerable situation of rising interest rates and dwindling money supplies that instead could be contributed towards social spending. In other words, Canada would be subject to debt levels similar to the mid-1990s.

The government and politicians need to think long term and realize the risks of changing demographics if we are to save Canada from diving into an era of increasing deficits.

By Pawan Shamdasani, Staff Writer

ARB Team
Arbitrage Magazine
Business News with BITE.

Canada ranks high on 'better life index'

Canadians make more, work less, are happier with their lives and better educated than most residents of the 34 countries that make up the Organization for Economic Cooperation and Development, a new index suggests.

The OECD launched the "better life index" Tuesday, which allows comparisons between the member countries that go beyond the traditional economic measures, such as gross domestic product.

"Canada performs exceptionally well in measures of well-being," the agency said, citing statistics such as:

Make your own
Try the OECD interactive toolto create your own interactive index.
Nearly four out of five Canadians are satisfied with their lives, compared with three out of five for the OECD as a whole.
Average Canadian household income of $27,015 US in 2008, more than $4,700 above the OECD average.
Nearly 72 per cent of Canadians 15 to 64 have a paid job, above the OECD average of 65 per cent.
Canadians work 40 hours a year (a work week) less than the OECD average.
About 87 per cent of Canadians have the equivalent of a high-school diploma, much higher than the OECD average of 73 per cent.
Life expectancy in Canada is 80.7 years, a year above the OECD average.
The level of atmospheric PM10, tiny particles that are small enough to damage the lungs, is 15 micrograms per cubic metre, lower than the OECD average of 22.

But in terms of voter turnout, "a measure of public trust in government and of citizens' participation in the political process," Canada ranks at 60 per cent, below the OECD average of 72 per cent.

Canada's rankings are based on assigning an equal weight to each of 11 topics. But using the OECD's interactive index, individuals can adjust the weight of the topics and create their own index. The 11 items are housing, income, jobs, community, education, environment, governance, health, life satisfaction, safety and work-life balance.

The index "has extraordinary potential to help us deliver better policies for better lives,” said OECD secretary general Angel Gurría.

It's part of an OECD plan to measure well-being and progress.

The organization includes many European countries, the U.S., Mexico, Australia and New Zealand.

Canada needs more immigrants to boost economy, university study concludes

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Canada needs an extra one million immigrants between now and 2021 in a move that would boost the country’s Gross Domestic Product by 2.3%, it is claimed.

It would mean an extra 100,000 per year and would add $14 billion to the government’s tax revenue coffers as well as boosting investment in housing and creating more demand for goods and services, according to a study by Canadian professor Tony Fang.

The report from University of York in Vancouver looked at the impact of large-scale immigration on the Canadian economy and took into account factors such as how much immigrants participate in the labour force, spending on government services and infrastructure.

It also looked at funds brought in by immigrants, labour market differences between migrants and the effect of large-scale immigration on Canadian born workers.

Fang, an associate professor of human resources in the faculty of liberal arts and professional studies, concludes that higher levels of immigration will boost the economy.

Canada already has the highest immigration rate per capita out of major countries and has programmes in place to try to deal with skill shortages.

Fang’s previous work has found that training and development doesn’t help immigrants get ahead in their careers, even though it benefits other employees.

He found that immigrant and non-immigrant professionals are equally likely to undergo training and development initiatives funded by employers. However, immigrants don’t reap the rewards of higher pay, promotions, or increased job satisfaction reported by their non-immigrant counterparts.

‘We believe non-immigrants may be better able to leverage their training and, as a result, achieve higher salaries and promotions,’ he said.

‘There is an urgent need for employers to develop better policies for integrating and leveraging the talents of immigrant professionals,’ he added.

On average, immigrant professionals, that is those who hold at least an undergraduate, graduate, or professional degree, earn less than non-immigrants. They also tend to have lower promotion rates and shorter tenure with their current employer. In addition, they are less satisfied with their jobs and compensation.

A major barrier for immigrants, Fang noted, is lack of cultural fluency including language limitations and unfamiliarity with local training methods.

Why Canada's recession wasn't as brutal

TAVIA GRANT

Globe and Mail Blog

In the cacophony of daily news, a useful new analysis has put the recession in historical context: it was milder than previous ones, though the initial tumble in output and employment was sharper than in any post-war period.
Moreover, Canada is now the only G7 nation to have recouped its losses from the 2008-2009 recession, as both real GDP and employment remain below pre-recession levels in the other six countries, Statistics Canada’s chief economic analyst says.

For Canada, “this is a significant achievement, given that the global economic downturn which began in 2008 was the most severe and synchronized since the 1930s,” said Philip Cross in a paper published Thursday.
While no Canadian body dates official starts and ends to recessions, as in the U.S., Mr. Cross estimates it started in August or September of 2008 and lasted until May or July of 2009. The economy was “clearly” in recession for three quarters, from the fourth quarter of 2008 to the second quarter of 2009, he says.
He explored what factors caused the precipitous slide, and why the downturn wasn’t nearly as severe as in previous recessions of 1981-82 and 1990-92, nor as bad as in other countries. Here are some of his findings:

Jobs contracted at only half the rate at which output fell during this recession. That’s because employers in Canada relied almost equally on reductions in employment and shorter workweeks to cut total hours worked in line with output. That response is different than in prior recessions -- in the prior two downturns, employers relied on cutting jobs much more than hours.

May, 2009, seems to be the low point for monthly GDP, “when widespread plant closures in the auto industry as two major firms went bankrupt depressed output, and the same month was the low in hours worked.”

The initial speed of descent in the last downturn exceeded that in the other two recessions.

But employment bounced back much more quickly. It took four years after the 1990 recession began for the labour market to recover; three years after the 1981 recession, and two years (for both GDP and jobs) to recuperate in the past recession. The downturn in the early 1990s was marked by a rare double-dip recession.

Full-time job cuts were heavier in prior recessions than the recent one. Full-time employment at the end of last year is still 64,000 below its pre-recession peak, which explains why total hours worked remain 0.7 per cent below their peak.

Exports plunged at a record rate. “The most striking feature of the 2008-2009 recession was the speed and severity of the contraction in exports,” the report said. The “unprecedented speed and severity of the fall in exports...reflects the impact on the global economy and trade flows of the unprecedented disruption in financial markets that occurred in the fall of 2008.”

With the fall in exports came a collapse of business investment. Investment in plants and equipment plunged by about 20 per cent in the recession, matching a record plunge. Investment has since picked up, but remains below pre-recession levels.

So why was this recession milder, with a speedier recovery? Household spending, Mr. Cross says. In prior recessions, it plummeted by nearly 6 per cent. This time round, it fell by only 2 per cent over two quarters and has already fully bounced back.
He attributes this to several factors: Canadian households had strong balance sheets going into the downturn. Employment didn’t fall as much as in past contractions. Credit wasn’t as impaired as in other countries. “This reflects both a sounder financial system and the massive response from policy makers both to shore up capital and to lower interest rates.”

Canada's growing popularity with foreign investors has "staying power": CIBC World Markets Inc.

La Tour CIBC from the east in Downtown Montreal.

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Strategic advantages over many advanced economies increasingly well recognized

TORONTO, July 14 /CNW/ - Canada's outperformance versus many advanced economies is creating "staying power" for the country's growing popularity with foreign investors, notes a new report from CIBC World Markets Inc.
"Canada is increasingly on the lips and minds of international investors," says Warren Lovely, government strategist with CIBC's Macro Strategy group, fresh back from meetings with investors across the U.S. and Asia. "Those we've talked to are getting religion on Canada's potential outperformance versus a growing list of advanced economies. Indeed, it's hard to recall a time when the country possessed such relative, if not absolute, strength."
In CIBC's latest Global Positioning Strategy report, Mr. Lovely identifies a growing list of "strategic advantages" that are boosting interest in Canada and its weighting in global investment portfolios.
Central to Canada's strong story is its fiscal advantage, says Mr. Lovely. He points first to Canada's much smaller need for fiscal adjustments to stabilize debt ratios. "Canada's provinces are not feeling the same heat as some U.S. states, are less prone to severe program cuts or increased revenue measures, and are therefore putting their regional economies at less risk."
In addition, the revenue picture for Canada's federal and provincial governments is also "brightening materially" with $15 billion in extra revenue projected for the year.
Mr. Lovely says the fiscal improvement will serve to reduce borrowing requirements and protect federal and provincial credit ratings. It also means less bond issuance from Ottawa which will "leave plenty of room in the long end for provincial and corporate issuers."

Other distinguishing advantages for Canada noted in the report include the following:

 Years of fiscal outperformance and surpluses in Canada have created
        budgetary room to slash corporate taxes. This result combined with
        important tax reforms have given Canada a growing advantage over
        competing tax jurisdictions.

   Canada has emerged as a growth leader in the developed world, with
        the IMF the latest forecaster to see the country leading the G7 in
        terms of average real GDP growth during 2010-11. While Canada's
        growth rate is only modestly above that of the U.S., its indicators
        of domestic economic health, such as employment, are substantially
        brighter.

   Canada has a well-capitalized banking sector with a less dramatic
        adjustment to regulation in store.

   Canadian exporters have limited direct exposure to slow-growing
        Europe and at the same time have had success in increasing exports to
        the faster-growing BRIC region.

   Healthy international and interprovincial migration, particularly in
        western Canada has created less onerous demographic pressures which
        in turn support a faster potential economic growth rate.

But Mr. Lovely also sees some challenges to Canada's continuing outperformance. He notes that three quarters of Canada's exports go south of the border, meaning a "U.S. slowdown will leave its mark on Canada."
"Canadian and U.S. real GDP growth has never been more tightly correlated than during the past five years. So the end of an American inventory rebuilding process will sap demand for Canadian wares," adds Mr. Lovely.
Other risks to Canada's economic prospects include the impact of a continuing strong Canadian dollar on manufacturing, an overheated housing market and highly indebted household sector.
"Notwithstanding these challenges, Canadian governments are courting international investors from a position of strength, hardly beholden to foreign capital, but happy to take full advantage of a healthy appetite for Canadian fixed income product," says Mr. Lovely. "The message is getting through, and there's every reason to believe that today's strong foreign investor interest in Canada will have staying power."
The complete CIBC World Markets report is available at: http://research.cibcwm.com/economic_public/download/gps_jul10.pdf

CIBC World Markets Inc. is the corporate and investment banking arm of CIBC. To deliver on our mandate as a premier client-focused and Canadian-based wholesale bank, we provide a wide range of credit, capital markets, investment banking, merchant banking and research products and services to government, institutional, corporate and retail clients in Canada and in key markets around the world.

How Canada can cash in on the U.S. economic malaise.

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By Harvey Enchin and Fazil Mihlar, Vancouver Sun

"Sometimes we stare so long at a door that is closing that we see too late the one that is open."
-Alexander Graham Bell
---
Canada has the opportunity of a lifetime waiting to be seized.
Non-financial institutions in the United States have almost $2 trillion US in cash on their balance sheets but have no desire to invest there. Luring some of that money to Canada will help further modernize our economy, create jobs, generate more tax revenue and raise our standard of living.
This window of opportunity won't be open for long, so Ottawa and the provinces should launch a major marketing effort now to turn American apprehension into economic gain for Canada.
What does Canada have to sell to those holding the $2-trillion US purse strings? A comparative advertising strategy would focus the minds of American investors on the advantages Canada offers, including some of the following:
- Lower corporate income tax rates. The U.S. statutory federal corporate income tax rate is 35 per cent, a number that is more likely to go up than down given the country's debt burden. Canada's is 18 per cent, down from 19 per cent in 2009. Scheduled tax cuts will bring Canada's rate to 16.5 per cent in 2011 and to 15 per cent in 2012, giving Canada the lowest statutory tax rate in the G7.
- Competitive personal income tax rates. It may comes as surprise for Americans to learn that Canada's federal personal income tax rates are lower than those in the U.S. The U.S. rate on income between $34,000 US and $82,400, US for example is 25 per cent. In Canada the rate on income between $40,970 and $81,941 is 22 per cent. On income from $171,850 US to $373,650 US the U.S. rate is 33 per cent. Canada's rate reaches a maximum of 29 per cent for all income over $127,021.
Of course, most of Canada's provinces and territories impose personal income tax as well, but so too do many U.S. states and some municipalities. It is true that Canada obtains slightly more personal tax revenue per capita than the U.S. does -$5,800 US vs. $4,700 US -but this difference is easily offset by the cost of health care that Americans incur privately and Canadians cover through taxation. It's worth noting that the U.S. has inheritance taxes and Canada does not.
- Lower capital gains tax rates. Canadians pay tax on 50 per cent of their capital gains at their marginal rate. On a gain of $1,000, for instance, only $500 would be subject to tax. At a combined federal-provincial rate of, say, 35 per cent, the tax payable would be $175. Americans pay tax on the net total of capital gains. More importantly, the reduced rates introduced in 2003 by then president George W. Bush, initially due to expire in 2008 and extended until 2011, will finally sunset, raising the discounted rate of 15 per cent to 28 per cent. So, on that same $1,000 capital gain, an American investor would pay $280.
- Canada can maintain low tax rates: Because Canada is in better fiscal shape than the U.S., Ottawa can keep taxes low while Washington will have little choice but to raise them. The U.S. national debt is $13.6 trillion US, or $42,942 US per capita. Canada's is $534.7 billion, or $15,715 per capita.

The ratio of debt to gross domestic product stands at about 93 per cent in the U.S., and the U.S. Treasury Department sees it rising to 102 per cent when debt is expected to reach $19.2 trillion US in 2015. Canada debt-to-GDP ratio is 33 per cent.
Government spending as a percentage of GDP has declined in Canada since hitting a peak of 53 per cent in 1992 and recently slipped below 40 per cent. In the U.S., it has turned sharply higher, rising to 42.7 per cent in 2009 from 39 per cent in 2008. It is expected to reach 45 per cent next year.
The White House has forecast the U.S. deficit for 2010 to be $1.6 trillion US or 10.6. per cent of gross domestic product, the highest level since the Second World War. Canada's deficit is seen at $49.2 billion, or 3.7 per cent of GDP. Canada should be able to manage its debt and still lower taxes. The U.S. clearly cannot.
- Canada's universal health care system is good for business. In Canada, health care is paid for mainly by employees through their income taxes. In the U.S., most companies pay for health benefits for their full-time employees. In 2002, automotive companies confirmed that Canada's health care system saved labour costs.
About 70 per cent of all health-related spending is financed by the Canadian government, while the U.S. government covers about 46 per cent. Yet the U.S. government spends more on health care than the Canadian government does -- 14.6 per cent of GDP in the U.S. compared with 10 per cent in Canada. And that translates into higher health care spending per capita -- $6,714 US in the U.S. vs. $3,678 US in Canada.
A number of studies have concluded health outcomes are better in Canada, particularly on life expectancy and infant mortality measures, but these findings are controversial.
Canada can offer the stability of a universal health care system that has been in place for many years while the U.S. faces the uncertainty of new health care legislation passed this spring that will not be fully implemented until 2014 and carries a price tag estimated at $940 billion US.
- Canada's banking system is sound. The credit crisis and recession that ravaged U.S. financial institutions caused barely a ripple at Canada's banks. A cautious business culture and tough regulation steered them away from the toxic derivatives and lax lending practices that brought down major Wall St. investment firms and countless small banks across the U.S. Moody's scores Canadian banks at the top of its ranking of the world's banks and Global Finance magazine lists them among the safest banks of the 500 it reviews. The World Economic Forum's Global Competitiveness Report ranked Canada's banking system No. 1 in the world, ahead of Switzerland's and Hong Kong's.
The number of bank failures in Canadian history can be counted on one hand, while many thousands have collapsed in the U.S. Bank regulation in the U.S. is highly fragmented with as many as half a dozen federal and 50 state regulatory authorities involved, depending on a bank's charter. In Canada, the regulatory responsibility rests with the Office of the Superintendent of Financial Institutions.

- Regulation is similarly stable and streamlined in other sectors of the Canadian economy, resulting in less uncertainty, better planning and a lower cost of capital.
- Canada is a safe country. The homicide rate in the U.S. is three times higher than Canada's, the rate of aggravated assault is double and the incidence of robberies is 65 per cent higher. Seventy per cent of murders in the U.S. are committed with firearms, compared with 30 per cent in Canada.
Canada has first-class infrastructure. Road, rail and air, power grids, pipelines, fibre optic and wireless networks are all the equal of any in the world. Put it all together and, in the final analysis, the unit cost of doing business is lower in Canada than the U.S.
Some studies attribute Canada's low -- and falling -- crime rate to social cohesion; a multifactor measure that gauges trust in people, confidence in institutions, respect for diversity, and a sense of belonging, along with more common indicators of poverty, income distribution, employment, health, mobility, literacy, education and housing.
- Canada has an educated workforce. In fact, it boasts the highest proportion of postsecondary graduates (46 per cent) in the 25-to-64 age group among member countries of the Organization for Economic Co-operation and Development and the G-7.
- Arguably, Canada is more welcoming to immigrants than the U.S. and newcomers to Canada have higher levels of education attainment than native Canadians. By comparison, the quality of the U.S. workforce may suffer, given the desperate budget problems many states face. If these fiscal challenges result in cutbacks and layoffs, school performance may suffer.
- Canada has abundant resources. The availability of affordable energy, rich mineral deposits, fresh water, arable land and thousands of kilometres of forests offers benefits to any company, whether a producer or consumer of commodities.
- Canada has first-class infrastructure. Road, rail and air, power grids, pipelines, fibreoptic and wireless networks are all the equal of any in the world.
Put it all together and, in the final analysis, the unit cost of doing business is lower in Canada than the U.S.
The 2010 KPMG study of 95 cities across 10 countries concluded that Canada was the best place to invest, with a five-percent cost advantage over the U.S. Out of the 35 major cities with populations of more than two million, Vancouver, Montreal and Toronto ranked in the top 10 in terms of cost of doing business.
We could provide further inducements by setting up processes that put out the red carpet for businesses -- not wrap them in red tape -- by having one number to call or an e-mail address that would deal with any problems firms encounter at the federal, provincial or local levels of governments.

U.S. might pick up tips from Canada’s economic rebound

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Washington — Whatever else they’ve thought about their neighbor to the north, Americans have almost never looked to Canada as a role model.
Indeed, during the long, bitter push to revamp the U.S. health care system, opponents repeatedly warned that if we weren’t careful, we could end up with a medical system like Canada’s.

But on health care, and such crucial issues as the deficit, unemployment, immigration and prospering in the global economy, Canada seems to be outperforming the United States. And in doing so, it is offering examples of successful strategies that Americans might consider.
While the United States, Japan and much of Europe are struggling with massive fiscal deficits, Canada’s financial house is tidy and secure. Most economists say it will take years for the United States to make up the 8 million-plus jobs lost during the recession, but Canada — despite its historic role as a major supplier for the still-troubled U.S. auto industry — already has recovered essentially all of the jobs it lost.
Meanwhile, as Americans continue their grueling battle over immigration, Canadians have united behind a policy that emphasizes opening the door to tens of thousands of skilled professionals, entrepreneurs and other productive workers who have played an important role in strengthening the Canadian economy.
Granted, Canada’s problem with illegal immigration is smaller, and its economy does not match the scale and dynamic productivity of the world’s largest. But on the most troubling issues of the day, the U.S. is locked in near-paralyzing political and ideological debates, while those issues are hardly raising eyebrows in Canada.
“We did a lot of things right going into the financial crisis,” said Glen Hodgson, senior vice president at the Conference Board of Canada, a business-membership and research group in Ottawa.
One of the most important, he said: Back in the 1990s, Canada cleaned up the fiscal mess that most every developed nation is now facing.
Earlier that decade, Canada too was straining from years of excessive government spending that bloated the nation’s total debts, to 70 percent of annual economic output — a figure the U.S. is projected to approach in two years.
As with Greece, Portugal and Spain this year, Canada’s credit rating was downgraded in the early 1990s, sharply raising its borrowing costs. With its economy suffering and pressure mounting from international investors — Wall Street bankers in particular — Canadian officials slashed spending for social programs and shifted more of the cost burden to provincial governments, which almost everyone in Canada felt.
With the economic downturn, Canada pumped up public spending to stimulate growth, as other nations did. Still, its fiscal shortfall this year is projected at $33 billion, comfortably below the 3 percent-of-GDP threshold that economists consider a manageable level of debt.
Washington’s deficit this fiscal year is estimated by the Congressional Budget Office at $1.35 trillion — or 9.2 percent of projected GDP.
The United States’ larger size — its population and economy are roughly 10 times those of Canada — makes direct comparisons difficult. And many Canadians readily acknowledge that American entrepreneurship and productivity are enviably stronger.
“U.S. businesses are certainly looking at lessons learned from Canada,” said Bart van Ark, chief economist at the Conference Board in New York. “In a nutshell, Canada has been very pragmatic in dealing with the economy.”
Canada’s approach to immigration is one example. With one of the highest immigration rates in the world, Canada has been receiving about 250,000 permanent residents annually. About one-fourth of the new arrivals gain entry through family relations, but more than 60 percent are admitted as “economic immigrants” — that is, skilled workers, entrepreneurs and investors.
In the U.S., it’s basically the reverse: Most of the 1 million-plus permanent residents received annually have been family-sponsored; only about 1 in 7 are admitted based on employment preferences. That is, Washington emphasizes bringing in family members of immigrants already in the U.S. Ottawa puts the emphasis on admitting those who can contribute to the economy.

Immigration Canada

Canada keeps AAA credit rating

How is Canada Going to Handle the Debt from Baby Boomers in 2020?

Canada ranks high on 'better life index'

Make your own

P.O.V.

Canada needs more immigrants to boost economy, university study concludes

Why Canada's recession wasn't as brutal

TAVIA GRANT

Globe and Mail Blog

Canada's growing popularity with foreign investors has "staying power": CIBC World Markets Inc.

How Canada can cash in on the U.S. economic malaise.

U.S. might pick up tips from Canada’s economic rebound

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