OECD Economic Surveys: Canada

Every 18 months
1999-0081 (online)
1995-302X (print)
Hide / Show Abstract

OECD’s periodic surveys of the Canadian economy. Each edition surveys the major challenges faced by the country, evaluates the short-term outlook, and makes specific policy recommendations. Special chapters take a more detailed look at specific challenges. Extensive statistical information is included in charts and graphs.

Also available in French
OECD Economic Surveys: Canada 2010

OECD Economic Surveys: Canada 2010 You do not have access to this content

Click to Access: 
  • PDF
  • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/oecd-economic-surveys-canada-2010_eco_surveys-can-2010-en
  • READ
13 Sep 2010
9789264083257 (PDF) ;9789264083240(print)

Hide / Show Abstract

This 2010 edition of OECD's periodic review of Canada's economy includes chapters covering policies to sustain the recovery, fiscal consolidation strategies, and health care reform.

loader image

Expand / Collapse Hide / Show all Abstracts Table of Contents

  • Mark Click to Access
  • Basic Statistics of Canada, 2009
  • Executive summary
    Canada’s inherent domestic strengths and timely policy actions ensured limited financial and economic damage from the global recession. The authorities responded aggressively to the onset of the crisis to keep credit flowing, which it did, particularly to households, making both consumer spending and housing investment remarkably resilient throughout the recession. However, the counterpart was a rapid rise in household debt. The initial rebound in activity has been very strong, helped by fiscal stimulus, but an increasing number of households may become vulnerable as interest rates increase. With the expected withdrawal of monetary stimulus, the tighter financial conditions resulting from the much stronger currency, the waning of fiscal policy measures and a likely further slowdown in household credit growth, the pace of recovery will ease somewhat in coming quarters. Once excess capacity has been worked off, the economy’s trend growth rate is projected to be much lower over the medium term than it has been in the past as changing demographics slow the growth of the working-age population. Structural reforms to boost potential output growth should therefore remain at the top of the policy agenda.
  • Assessment and recommendations
    The recession in Canada was mainly externally driven, the result of a high degree of openness, in particular heavy exposure to the US housing and auto sectors and to commodity prices, which declined quite sharply during the global downturn. Thanks to multiple initial strengths, such as a sounder banking system, a less leveraged corporate sector and a relatively strong fiscal position, the economy weathered the world-wide financial turmoil and the ensuing recession relatively well. The monetary and fiscal authorities coordinated their actions to help stabilise financial markets.
  • Macro and financial-sector policies to sustain the recovery
    Canada benefited from many strengths such as a less-leveraged financial sector, few subprime mortgages and sound corporate balance sheets as it weathered the global economic crisis of 2007-09. Actions by the monetary and fiscal authorities have stabilised financial markets and provided substantial support to the economy. With upturns in global trade and in commodity prices, the recovery is now well under way, but the pace of expansion is projected to slow later in 2010 and in 2011 as policy stimulus is withdrawn, inventory rebuilding runs its course and households reduce their spending growth in reaction to high indebtedness. In the longer term, Canada faces the same reform challenges that other OECD countries face to allow credible exit paths for big banks and to increase competition, contestability and shareholder oversight in this sector. International efforts to strengthen financial-system resilience should take inspiration from Canada’s own model of risk-based prudential regulation, which successfully held banking risks in check. Reforms that imply large increases in bank capital should be accompanied by greater market discipline to contain moral hazard and spur efficiency. Securities markets should be better regulated in order to attract foreign capital, encourage competitive impulses and improve macro-prudential regulation.
  • Fiscal-consolidation strategies for Canadian governments
    Although Canada remains in an advantageous fiscal position relative to many other OECD countries as the global economy recovers from the 2008/09 recession, the deterioration in the country’s public finances has been substantial. Years of spending increases above trend economic growth have led to high structural levels of expenditure, and some Canadian governments are now on unsustainable fiscal paths, a diagnosis made starker when taking an even longer-term view that considers the fiscal implications of demographic change. Evidence shows that successful fiscal consolidations tend to rely on spending restraint rather than tax increases.
  • Overcoming challenges in health-care reform
    Canada’s public health-care system (Medicare) offers top-notch care for legislatively-defined essential services, without charge, to all residents. Treatment quality and aggregate health outcomes are good, and the population values in particular the notion of fairness. However, pressure for health-care cost control is constant. Allocations of scarce health-care resources take place through supply-side restrictions, often in the form of waiting lists for elective services, as prices do not play any role. As a result of the historical development of Canada’s health care system, some of the fastest rising costs, notably for pharmaceuticals and home care, are largely outside of Medicare. Despite equality of access to health care, there is some inequality of health outcomes, suggesting the need to pay greater attention to other (social) determinants of health. As in other OECD countries, constraints are set to tighten further, both in the medium term as post-crisis deficits are wound down, and more durably in the longer term, as an ageing population requires substantially more services, while growth in the tax base to fund them slows, and technology goes on expanding possibilities for life extension and life quality. The objective should be to complement top-down supply control by more accountability and use of price incentives at the micro level as the main means of promoting both efficiency and quality, and hence system sustainability.
  • Add to Marked List
Visit the OECD web site