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2018 OECD Economic Surveys: Canada 2018

image of OECD Economic Surveys: Canada 2018

Well-being is high in Canada, and the economy has regained momentum, supported by a rebound in exports and strengthening business investment. Macroeconomic policies are gradually becoming less stimulatory, and budget policies are sustainable in the long term, although difficulties remain at the provincial level. House price appreciation has slowed and even reversed in some locations, partly in response to macro-prudential and tax measures, reducing wealth gains and the associated boost to private consumption, but prices and household debt remain high and affordability poor. The major risks to the economic outlook are greater trade restrictions, notably in the United States, and a housing market correction. Progress is being made in improving workforce inclusion, but challenges remain, notably in the areas of increasing female labour force participation, improving labour market information to reduce qualifications mismatches and supporting later retirement through more lifelong learning and flexibility in working hours. Canada has a well-run immigration system. Immigrants are generally well integrated, although their earnings are considerably lower than those of the comparable native-born. Selection of economic immigrants has been refined and integration programmes developed to close this gap, but these measures need to be taken further. Meeting Canada’s climate-change commitments will also be challenging.

SPECIAL FEATURES : INCLUSIVENESS; IMMIGRATION



 

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Executive summary

Economic growth remains buoyantWell-being in Canada is high.Economic growth has eased back to potential rates since mid-2017 following problems in pipeline capacity.Macroeconomic policies are becoming less expansionary.GDP growth is projected to remain fairly robust.The greatest uncertainty in the outlook relates to increased global trade restrictions.High house prices create risksIn recent years, house prices have soared.Household debt has expanded alongside house prices, exceeding 170% of disposable income.A series of macro-prudential measures since 2008 have mitigated housing market risks.Unaffordability and affordable housing shortages raise inclusiveness issues.Workforce inclusion can be improvedThe federal government is working hard to improve female labour market outcomes.Initiatives underway to improve labour market information offer benefits especially for youthLater retirement can be supported through flexibility in working hours and skills development.Immigrant labour market integration lagsImmigrants earn less than the comparable native-born.Immigration policy has been changed to select immigrants with better earnings prospects.Canada has an extensive array of programmes that facilitate integration.More should be done to raise productivityHourly labour productivity continues to lag behind the upper half of OECD countries.Implementing past OECD recommendations would increase productivity.

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