Canada's gross debt as a percentage of the 33 countries total increased at the second-highest rate
Among 33 industrialized nations, Canada witnessed the second-highest growth in its overall debt relative to the size of the economy (GDP) from 2019 to 2021, trailing only Japan, according to a new report from the Fraser Institute, a free-floating, non-partisan think tank in Canada.
“Despite Canada’s comparatively high debt accumulation during the pandemic, which many argued would result in strong economic performance, we actually underperformed most of our peers,” said Tegan Hill, economist at the Fraser Institute and co-author of The Accumulated Debt and Economic Performance of Industrialized Countries during COVID.
According to information from the International Monetary Fund (IMF), the analysis determines that Canada experienced the second-highest increase in its gross debt as a percentage of the world economy from 2019 to 2021 out of 33 nations. The ratio of gross debt to GDP increased from 87.2% percentage points in 2019 to 112.1% in 2021, a rise of 24.9 percentage points.
Canada lagged in terms of economic growth, placing 23rd out of 33 nations in 2020 with a -5.2% (inflation-adjusted) increase in the economy and 22nd in 2021. This is despite leading its counterparts in debt accumulation.
Hill commented that, “It’s interesting to note that despite the borrowing by Canadian governments, particularly Ottawa, our recession in 2020 was deeper and our recovery in 2021 weaker than most other industrialized countries.”
Even worse, Canada ranked third in the world for unemployment in 2020 out of 33 industrialized countries. In 2021, it also has the eighth-highest unemployment rate of 7.4%.
Canada underperformed the United States on both metrics.
Ireland also beat Canada on both criteria in 2020 and 2021 and decreased its gross debt (as a proportion of the economy) from 2019 to 2021. In fact, Ireland topped the group on both measures.
“Clearly, Canada’s significant debt-financed spending didn’t translate into a comparatively strong economy during the pandemic,” Hill stated.
