OECD says Canada to lead G7 in growth for next 50 years
China predicted to become globe's biggest economy as early as 2016
The Paris-based Organization for Economic Co-operation and Development predicts Canada will lead the Group of Seven industrialized economies in growth over the next half century.
In a report released Friday, the OECD says it expects Canada's real gross domestic product will average 2.2 per cent growth annually over the next 50 years.
Canada, it predicts, will be near the top on a per capita basis – possibly a truer measure of success — with only Japan sneaking ahead.
Of the other G7 nations, only the United States and the United Kingdom with 2.1 per cent average advances come close.
That doesn't mean Canada will beat all industrialized nations, however. Australia, New Zealand, Israel and Norway — whose economies are too small for admittance to the G7 club — are projected to experience even stronger average growth rates.
In part, Canada's superior growth rates are based on expectations that its labour force will continue to grow, although more slowly in the age of retiring baby boomers. Some countries, like Japan and Germany, are likely to experience outright contraction, which is why they do well on the per capita measure.
"For Canada, it's a fairly young population, fairly well-educated workforce and you have all these natural resources that give you higher growth than other countries," said Matthias Rumpf, a spokesman with the organization.
India expected to eclipse Japan in a year or two
The OECD report also predicts the balance of global economic power will shift dramatically, with China overtaking the U.S. as the world’s biggest economy as early as 2016.
The organization says China is expected to surpass the eurozone in a year or so.
It forecasts that India’s GDP will surpass that of Japan in the next year or two, the euro area in about 20 years and the U.S. "over the long term."
The report came a day after Prime Minister Stephen Harper wrapped up a six-day trade mission in India and moved on to Manila.
Together, it says, the two emerging Asian economies will overtake the collective economy of the G7 nations in size by around 2025 and Indonesia and Brazil will outpace Japan and the eurozone.
"The economic crisis we have been living with for the past five years will eventually be overcome, but the world our children and grandchildren inherit may be starkly different from ours," said OECD Secretary General Angel Gurría.
"As the largest and fastest-growing emerging countries fully assume a more prominent place in the global economy, we will face new challenges to ensure a prosperous and sustainable world for all."
"Education and productivity will be the main drivers of future growth, and should be policy priorities worldwide," Gurria said.
But in terms of per capita standard of living, the OECD says China and India will still be well below that of the Western world. The organization represents most of the world's wealthiest countries.
The OECD cautions that the projections should be taken with a grain of salt, given the extended timeline horizon, but Bank of Montreal economist Doug Porter says in some ways long-term forecasts are more reliable. Time tends to smooth out short-term shocks, he explains.
Porter said nothing in the OECD overviews strikes him as being unrealistic.
"I don't have a huge quarrel with the conclusion, I think we can or will likely lead the G7, but it'll be a horse race with the U.S. in particular," he said.
"I'm not sure I would be as positive on a per capita basis. Canada hasn't seen that kind of per capita gain in the past 30 years and I'm not sure we can really ramp it up in the next 30 to 50 years," he added.
With files from The Canadian Press