Population Growth and the Economy

Amid all the talk of how serious Canada's recession during the first two quarters of 2015 actually was, one point seems never to be mentioned--population growth. Given that Canada's population is growing at an average of 1.1% per year, the economy needs to grow at at least 1.1% a year just to stay in the same place on a per capita basis.

We are now told that Canada's economy shrank on an annualized basis by 0.8 % in the first quarter and 0.5% in the second quarter--by 1.3% on an annualized basis overall, in other words. But factor in population growth: on a per-capita basis that's a decline in GDP of 2.4%.

Sure, this recession seems to have been not particularly deep compared to some in the past. But to suggest that a per capita 2.4% economic decline is a mere technicality is to significantly distort the facts.

The point is one that deserves to be made whenever GDP figures are released--though the effect it draws attention to will not always move the numbers in the same direction. In a country such as Japan, for example, population is now falling by about 0.2% annually; calculating the per-capita rate of GDP growth in such circumstances requires an upward rather than a downward adjustment to the raw figure.

Regardless of the direction, it would be a healthy development if, whenever GDP figures are released by a country, statisticians routinely provided the equivalent as a per capita figure.