Four years of growth before boomers start to retire

OTTAWA: Canada can expect robust economic growth over the next four years, but it will slow after 2014 as baby boomers retire from the workforce, according to a Conference Board of Canada report.

Canada’s Canadian Outlook: Long-Term Economic Forecast says real GDP will increase 3.1% this year, 3.7% in 2011, and will average 3.4% from 2012 to 2015, while the national unemployment rate is expected to fall below 6 per cent.

“Canada’s near-term economic outlook is much brighter than it was just a few months ago,” said Pedro Antunes, director, national and provincial outlook in a release. “Beyond 2014, however, economic growth will be restrained as the baby boomers leave the workforce. Labour shortages brought on by a wave of retirements will be the dominant economic trend until about 2030.”

With tight labour markets on the horizon, the Conference Board projects annual immigration to reach just over 350,000 per year in the final three years of the forecast, 2028 to 2030.

The Ottawa-based research firm doesn’t expect strong immigration levels to reverse Canada’s aging trend, but it will help stabilize total population growth throughout the forecast period. By 2030, Canada’s population will reach 41.7 million, up from 33.6 million in 2009.

The Conference Board said increased capital investment and improved productivity growth are key to sustaining strong economic performance over the long term horizon. Strengthening these areas will help generate income and revenues necessary to sustain prosperity and to help pay for public programs such as health care.

For the first time, the outlook’s long-term forecast includes a baseline for Canadian greenhouse gas (GHG) emissions to 2030. It’s based on the long-term economic forecast and emission intensity levels in industrial sectors and households between 1990 and 2007. Under this scenario, the Conference Board forecasts GHG emissions in 2030 would increase by nearly 50% over 2007 levels from an estimated 724 megatonnes in 2007 to 1,080 megatonnes in 2030.

“As policies to mitigate climate change are introduced and implemented, the emissions intensities and energy mix should change,” said Antunes. “This forecast provides a baseline with which to evaluate policies to reduce GHG emissions.”