News release

Quarterly report shows Canada's economy balancing growth and stagnation

Dec 16, 2020
Dec 16, 2020
0 min. read

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  • Fourth edition of ‘The Real Economy: Canada’ looks at challenges and trends that might impact the Canadian economy next year
  • Report shows strong opportunities for economic growth, primarily through technology, but volatile scenarios could be a threat

RSM Canada ("RSM"), the leading global provider of audit, tax and consulting services focused on middle market businesses, today launched its fourth edition of ‘The Real Economy, Canada’ – a quarterly report that provides Canadian businesses with economic analysis and insights into factors driving growth in Canada's middle market.

Off the back of a recent federal election and a year of economic uncertainty, the latest report shines a light on what’s in store for Canada’s economy in 2020, exploring potential opportunities for the country’s growth next year, and highlighting some of the main geopolitical and industry headwinds that could slow the economy.

Key findings in this quarter’s report include:

  • Technology will be a key driver in the growth of Canada’s manufacturing sector in 2020.
    • Canadian technology-based enterprises have grown faster than other industries since 2018. The country’s IT and communications sectors are growing at a 4% rate, and durable goods manufacturing jumped 2.5% in August. This upward trend is expected to continue into 2020.
    • Toronto also has one of the largest collections of A.I. experts and start-ups in the world, setting it up for success next year.
  • Canada’s openness to immigration, combined with a fresh wave of educated workers, will help boost its economy next year.
    • Canada’s openness to immigration has attracted highly skilled workers, whose skills and expertise are helping drive growth in its economy.
    • In fact, a report from the Conference Board found that, without immigration, Canada’s labour force and growth would shrink from 1.9% to 1.3%.
    • There has also been an increase in educated workers entering the labour force – 27% of Canadian workers now have at least an undergraduate education, with almost one-third holding postgraduate degrees.
    • This also helps counteract the challenge of Canada’s aging population, with large segments of the workforce currently shifting out of the labour pool.
  • The consumer sector is cause for concern in the short-term.
    • There are pockets of higher unemployment in certain provinces, while increasing housing and living costs are squeezing standards and causing tension.
    • There is job uncertainty amid a slowing market.
    • If uncertainty were to increase further in 2020, there could be damage to the household consumption component – which makes up 57% of Canada’s GDP.
  • Canada’s lagging productivity is creating a wage gap with the U.S.
    • Canada’s productivity growth – a key factor in determining living standards – has been losing ground to the U.S.
    • The gap is the largest it has been in 20 years (76.9%), which means that the average American’s income is almost 25% greater than the average Canadian’s.
    • Decreasing investment and oil prices have contributed to this gap, as have  low levels of next gen technology, such as A.I. or robotics, adopted by Canadian businesses.
  •  Canada’s energy and commodities industries face a tough 2020.
    • Hesitancy in the global market in 2019 has meant a decline in appetite for Canadian energy and commodities.
    • The industry is down 3.9% and looks to continue this downward trend into 2020.
    • In addition, as we head into 2020, the Canadian dollar is weakening at the potential of another oil glut and a concurrent drop in commodity prices.

“All the signs from our latest report point to a spill-over of economic uncertainty in Canada as we head into 2020,” said Joe Brusuelas, chief economist with RSM US LLP. “Though the country’s economy is poised to see exciting areas of growth next year, mainly due to its blossoming tech sector and a new wave of skilled and educated people entering the workforce, ongoing challenges such as the U.S.-China trade war and low global interest rates are contributing to a sense of uncertainty and hesitation.”

“Despite these headwinds, Canada certainly has potential to compete in the global economy next year through its expertise in digital technology and advanced manufacturing,” said Alex Kotsopoulos, partner, projects and economics with RSM Canada. “The country is already carving out a great reputation in next-generation technology such as A.I., and further investment in this field, along with key industries such as manufacturing, will help foster growth and spur job creation for small-to-medium-sized businesses.”

For more information on ‘The Real Economy, Canada’ report, or to download it, please visit

About RSM Canada

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RSM Canada LLP provides public accounting services and is the Canadian member firm of RSM International, a global network of independent assurance, tax and consulting firms with 64,000 people in 120 countries. RSM Canada Consulting LP provides consulting services and is an affiliate of RSM US LLP, a member firm of RSM International. For more information visit, like us on Facebook, follow us on X and/or connect with us on LinkedIn.