The impact of a growing cohort of over 65s will be a reduction in GDP over the next 20 years
Canada’s per-person GDP could be reduced by around $11,200 over the next 20 years due to an increased population of seniors.
That’s according to Fraser Institute economist and director of fiscal studies Jake Fuss, who says that the share of population over 65 is estimated by Statistics Canada to increase from around 18% in 2022 to as high 25.5% by 2043.
The think tank’s report ‘The Effect of Population Aging on Economic Growth in Canada’ calculates that a 10% increase in the share of the population aged 65 years and older is associated with a reduction in the per-person GDP (inflation-adjusted) growth rate of 0.23 percentage points.
While this may sound small, it could mean a reduction in Canada’s per-person GDP compared to a flat over 65s population in the range of $4,300-$11,200, depending on how large the seniors’ population gets.
“Overall, the seniors’ portion of the population in Canada has steadily increased over the past few decades and that number is widely expected to continue to rise, which has serious implications for Canadians and the economy,” said Fuss.
Policies required
With the overall effect of an aging population meaning Canadians will be poorer, Fuss is calling on policymakers to take this into account.
“Canadian policymakers need to embrace a wide range of policies aimed at improving economic growth to offset the adverse economic and budgetary effects of population aging,” he concluded.
