Canada's Productivity Problem

Why Canada's productivity and income per person have lagged the US, the reasons like low business investment and weak competition, and why the central bank called it an emergency.

Canada has a productivity problem.

The gap

Canada’s output per hour worked has fallen further behind the US.
GDP per person grew slowly in the 2010s and early 2020s.

An emergency

In 2024, a senior deputy governor of the Bank of Canada said Canada’s weak productivity was an “emergency”.

Possible causes

Low business investment in machinery and technology.
Weak competition in sectors like telecom, banking and airlines.
Interprovincial trade barriers: rules that make it hard to trade across provinces.
Resource dependence.
Fast population growth without matching capital investment.

Internal trade barriers

Estimates suggest removing interprovincial barriers could raise GDP significantly. Provinces moved to reduce them in 2025.

Why it matters

Productivity determines long-term wages and living standards.

The provincial truck

A trucking company faces different rules on truck sizes in different provinces, raising costs of moving goods within Canada.

Thinking rich countries don't face productivity problems

Canada's productivity has lagged, threatening living standards.

Key takeaways

Canada's productivity has lagged the US.
The Bank of Canada called it an emergency in 2024.
Low investment, weak competition and internal barriers are causes.
Provinces moved to cut internal trade barriers in 2025.