The public relations meal made out of Canada’s latest gross domestic product numbers was doubtless nourishing for political spin doctors on the stump in the federal election, but it won’t do much to address the real economic issues facing the country.
According to Statistics Canada data, Canada’s economy shrank at an annualized rate of 0.5% in the second quarter, qualifying it for official recession status for the first time since the 2008 financial crisis.
While federal Liberal campaign machinery added the Conservative party’s explanation for stalled economic performance to its “Harper deception index,” economists and other analysts were not surprised by the GDP news. They have pointed out that factors affecting the Canadian dollar and the country’s trade deficit include persistent weakness in the oil and gas sector and fears of a minority federal government.
Because Canada has only one customer for its heavy crude – the United States – its oil continues to sell at a steep discount compared with international benchmarks.
That won’t change unless pipelines or other conduits are built to give Canadian crude access to world markets. And realistically fossil fuels are now, and will continue to be, the world’s primary energy source.
The good news for opponents of fossil fuel economics is that renewable energy continues to grow as a source of power. According to a recent International Energy Agency report, renewable energy sources have increased at an average annual rate of 2.2% since 1990. However, geothermal, solar and wind still accounted for a mere 3.7% of world electricity production in 2013.
Therein lies the opportunity for Canada. When the next oil and gas rebound revitalizes Canada’s GDP numbers, the country needs to invest more of its resource revenue in developing expertise in areas like renewable energy that can be marketed in a world hungry for fossil fuel alternatives.
That’s the kind of enlightened and far-sighted leadership the country and its economy need from its next federal government.
