Macklem says low productivity growth is Canada’s ‘Achilles heel,’ calls for action

Bank of Canada governor Tiff Macklem is sounding the alarm on Canada’s productivity problem during a speech in Winnipeg today.

According to prepared remarks, Macklem notes the strengths of Canada’s job market, including high labour force participation, strong immigration and a solid education system.

And while the labour market has certainly slowed under the weight of higher interest rates, the governor notes that it has adjusted to higher rates without a significant downturn.

But looking at the longer-term economic picture, he says productivity is the country’s Achilles heel, noting that on average, businesses invest much less per worker in Canada than they do in the United States.

Macklem says figuring out how to make Canada a better place to invest is critical to supporting non-inflationary economic growth and higher living standards.

The governor’s speech today comes weeks after the Bank of Canada delivered the first interest rate cut in more than four years earlier in June.

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The Canadian Press