Trudeau diversified Canada’s economy like no other

By Sydney Barrett Last updated Jun 26, 2023

Canada’s Prime Minister Justin Trudeau speaks to reporters in the foyer of the House of Commons on Parliament Hill in Ottawa on Wednesday, June 21. Sean Kilpatrick/The Canadian Press via `

Apparently, Canada has been in the news lately for all the wrong reasons. The Bank of Canada was accused of rocking global bond markets earlier this month when it unexpectedly hiked interest rates to a 22-year high. Then there’s the toxic, Martian haze of wildfires raging from British Columbia to Nova Scotia.

And yet these events obscure a more important reality: Canada is booming like never before. Unprecedented population growth, record-low unemployment, the most diversified economy in its 156-year history and a world-leading stock market since 2021 all help the country to be the best-performing country in the Group of Seven developed countries by 2025, according to nine out of ten economists.

Prime Minister Justin Trudeau, in office since 2015, started the process of transforming the eighth largest economy away from narrow-minded finance and fossil fuels towards technology and other industries of the 21st century. Unlike most of his G7 peers, Trudeau welcomed immigrants, having launched his successful campaign with the hitherto taboo declaration that at a time of exceptionally low interest rates, it was time to boost public spending and invest in more diversity, even if that meant toleration budget deficits.

Its open-door policy enabled Canada, for the first time, to grow by more than 1 million people, or 2.7%, in 2022, the fastest growth among industrialized economies and a comparable rate to many African nations (international migration was 95 .9% off), according to Statistics Canada.

Certainly, the real estate market remains unaffordable for too many Canadians, in part due to the rise in immigration. Meanwhile, inflation is showing no signs of slowing to pre-pandemic paces, meaning the Bank of Canada’s ongoing credit crunch could accelerate a recession.

Despite these forebodings, Trudeau’s policies are proving so successful that a nationwide poll earlier this year found that 52% of respondents said the prime minister’s plan to increase the number of new permanent residents each year will benefit the economy (38 March 2008). % indicated that the increase will be positive). a disadvantage).

In fact, the gap between those in work and those out of work has never been wider: a record 20.1 million people were employed in April, beating a record-breaking 5% unemployment rate, according to data compiled by Bloomberg. The 3.9 percentage point fall in the unemployment rate since the end of 2020 is the largest post-Covid-19 improvement among the top 10 economies (the US was No. 2 with a 3.3 percentage point fall).

Canada’s full employment is reflected in the more balanced economy Trudeau promised when he entered 24 Sussex Drive in Ottawa. Financials, the largest industry by market value in the S&P/Toronto Stock Exchange Composite Index, shrank from 33.5% to 27.8%, energy fell to 15.7% from 17.7%, while technology’s share fell from 5.4% almost doubled to 10.2%. Materials and Industrials rose from 9.4% and 7.6% to 12.3% and 11.8%, respectively. The Canadian company, which exported a record $624 billion in the third quarter of 2022, has never been more diversified, according to data from Bloomberg.

According to economists forecasts compiled by Bloomberg, Canada is already the fastest growing economy this year after the US in the G7 and is likely to repeat that feat in 2024. In 2025 it will be number 1 and increase the gross domestic product by 2.3%.

Technology is driving much of the growth. Shopify, the Ottawa-based commerce platform provider, is the third most valuable company in the country and the fifth largest application software company in the world, having more than doubled in value since its IPO in 2015. According to analyst estimates from Bloomberg, none of Shopify’s peers will come close to matching the 22% revenue growth this year.

Nuvei, the Montreal-based payments processing company that went public in 2020 and derives 60% of its revenue outside of North America, will grow 90% over the next 12 months on revenue growth of 47%, according to analyst estimates from Bloomberg. Bombardier, the Montreal-based private jet maker, has surged 171% in value over the past 12 months after reporting eight consecutive quarters of positive earnings surprises — a superlative net profit unmatched by any of Bombardier’s global peers.

That’s a far cry from Canada in the first six years of the new century, when Canadian stocks experienced greater price volatility and posted a total return (income plus appreciation) that underperformed the Bloomberg World Large & Mid Cap Index by 64%. Canadian equities are not only less volatile than ever, they are outperforming the benchmark by 13 percentage points, according to data compiled by Bloomberg.

Unlike his peers in the developed world, Trudeau managed to show 40 million fellow citizens the benefits of immigration, which is reflected in economic performance, which is another way of saying that investing in Canada is proving to be the best choice yet have proved.

Matthew A. Winkler, editor emeritus of Bloomberg News, writes about markets.