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January 6, 2020

Where Are The U.S. And Canadian Economies Headed—And Why?

Late last month, the United Kingdom-based Centre for Economics and Business Research released its forecasts for growth through 2034 in 193 countries, including Canada and the United States.

The group predicts the Canadian economy will move from the tenth largest in the world in 2019 and 2020 to the eighth largest by 2034. One reason the Centre is optimistic about growth in Canada is that the nation is “one of the most successful countries in the world for attracting migrants.” The nation’s population expanded 1.1 percent annually between 2014 and 2019 because of growth in immigration.

Canada also has had success in bringing down the rate of government debt as a share of the economy, the Centre said, even though “more action is necessary to bring levels of government debt down to a more sustainable level.”

The United States, meanwhile, is expected to go from being the largest economy in the world in 2019 and 2020 to the second-largest by 2033, behind China. The Centre said it predicts the trend rate of growth in the U.S. economy to be 1.7 percent annually from 2019 to 2024 and 1.6 percent annually from 2024 to 2034. In the short- to medium-term, the Centre said the United States’ “economic fortunes will be tied closely to geopolitical developments, in particular the trade conflict with China” and its “technological arms race” with that country. (As a reminder, MSCI consistently has argued that global overcapacity and other unfair trading practices, particularly by China, have harmed the U.S. steel and aluminum markets, and the U.S. economy as a whole. To address this circumvention, MSCI has advised U.S. officials to provide relief for producers up and down the supply chain and to consider consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements.)

The U.S. population is expected to grow at a slower rate than Canada’s rising just 0.6 percent annually through 2034.