Here's what you've missed in the world of Canada's economy — Canada has "very weak productivity."This is according to the Bank of Canada's (BOC) External Deputy Governor, Nicolas Vincent, who stated in a speech Wednesday, "To put it bluntly we are stuck in a vicious cycle — when productivity is weak, it's much harder to meet current challenges and seize opportunities for the future."He said the solution is not so easy to find: "There is no quick and easy way to improve productivity, and no single sector can do it alone."The BOC says Canada's productivity is low and has been since 2000..For the past 25 years, they say, Canada's productivity gap has been widening — especially with the US. Another astounding fact: If Canada had had the same productivity rate as the other G7 countries, it would have had an extra 9% GDP growth since 2000 — that's $7,000 more in each Canadian's pocket."Deep down, Canada’s affordability problem is really a productivity problem. …To make things more affordable, we need to raise our income," stated Vincent."And the way to grow our income is by increasing productivity.”.With a low productivity rate, Canada's economy is put in an even more vulnerable position during trade conflicts with the US.It's a "vicious cycle" because weak business investments "mean productivity in Canada is lower than it could be.""When productivity is lower, wages don’t rise as quickly, so household spending slows and, with it, demand for products and services.""The sluggish demand makes businesses less inclined to invest in new equipment and technology to increase their productivity.""Lower salaries also make it harder to attract talent."And so it goes....The BOC says there's only three ways to change course: allow businesses to invest in Canada through reducing policy restrictions.Encourage competition in telecommunications, transportation and financial services to boost innovation and lower prices.And invest in the workforce — through the recognition of credentials and educational investment.It says these pillars are essential to improving Canada's standard of living for the future.
