Tuesday, January 31, 2017

Ontario Silver Medal for Nominal GDP Growth

In terms of nominal Gross Domestic Product (GDP) at current prices for each year (NOT adjusted for changes in the prices of each province's products), Ontario ranked 2nd averaging 4.6%/year from the base year of 2013 to the latest data for 2016. BC was 1st at with 4.8% annual GDP growth, PEI 3rd at 3.2%, Manitoba 4th at 2.9% and Quebec 5th at 2.7%. 

Why am I reporting nominal GDP growth? 2013 to 2016 is an unusual period with a sharp drop in oil prices from the 2014 peak. As a result, nominal GDP fell by an average annual rate of -3% between 2013 and 2016 in Newfoundland, Saskatchewan and Alberta.

To my mind, the nominal GDP declines measure the pain suffered by Alberta, Saskatchewan and Newfoundland workers, businesses and governments better than real GDP.

Over short periods, provincial governments cannot be held responsible for GDP growth. Alberta does not control oil prices. Neither Ontario nor Quebec controls American demand for their exports. However, I do believe that over much longer periods measured in decades, part of the difference between Ontario vs. Quebec GDP growth rates will reflect provincial government economic policy frameworks. Let's see whether the sensible Quebec tortoise catches up with the Ontario populist hare as the years go by.
(Updated May 2018)

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