Canada's Economic Resilience

#trade #business #economics #productivity

Canada’s #1 economic challenge is its lack of productivity, driven by insufficient investment, an exodus of capital, and a tax system that burdens small and medium-sized businesses. Focusing federal policy on strengthening traditional export industries like oil, gas, and mining could stabilize productivity in the short term. However, this risks masking deeper issues, such as the ongoing decline of the manufacturing sector.

For business owners, addressing these challenges requires action. Management consultants can help by providing a clear assessment of your business’s current state and its long-term potential. Since the 2014 commodities crash, compounded by COVID-19 in 2020 and ongoing trade uncertainties, Canada’s economic landscape has shifted dramatically.

The data tells a stark story: since 2008, investments in machinery and equipment have plummeted, with only brief periods of recovery. Weak businesses—those with low returns on invested capital (ROIC) and minimal investment in R&D or equipment—struggle to compete. In contrast, strong businesses with above-average ROIC prioritize innovation and modernization. The choice is clear: business owners can either watch these trends unfold or take proactive steps to strengthen their operations.