Canada Prepares for Economic Downturn Ahead of Federal Election, Report Finds
Los Angeles/Ottawa (DNA) – A new report released by the Berggruen Governance Index (BGI) has recommended that Canada prioritize navigating an economic downturn as it heads into a federal election.
The report, conducted by researchers from the Los Angeles-based Berggruen Institute, the Luskin School of Public Affairs at the University of California Los Angeles (UCLA), and the Hertie School, a German university, highlights Canada’s vulnerabilities such as excessive reliance on extractive industries and heavy dependence on exports to the U.S.
The report states, “Although it is wealthy by global standards, Canada’s economy faces key vulnerabilities such as excessive reliance on extractive industries, shortages of critical goods like housing and heavy dependence on exports to the U.S.”
The report also notes that Canada ranks only 48th on the Economic Complexity Index, stating, “Given its wealth, this is a disproportionately low figure and increasing it should be a top priority.”
The BGI Project analyzes the relationship between democratic accountability, state capacity, and the provision of public goods to develop a deeper understanding of how governments can create a more resilient future for their people.
While Canada scores highly on most measures of the BGI, the report found that Canada’s performance “has been uneven over the last decade” and for many years has failed to address systemic problems.
The report also highlights the recent resignation of former Prime Minister Justin Trudeau and the selection of former Bank of Canada and Bank of England Governor Mark Carney as the new Liberal leader.
“Repeated threats of tariffs and even territorial annexation provoked outrage among Canadians and ignited a surge in patriotic sentiment, to which [Conservative leader] Pierre Poilievre’s defeatist ‘Canada is broken’ rhetoric was particularly ill-suited,” the researchers wrote.
Carney has rallied Canadians around national unity and managed to solidify a poll swing back to the Liberals. The report states, “What seemed like an inevitable win for the Conservatives just a few months ago has become a close race to the finish line.”
In the long run, however, the report says that Canada will need to contend with “persistent economic tensions” and “overcome governance challenges that predate both [U.S. President] Trump and Trudeau.”
The report also notes that while Canada has long been a supporter of greater immigration, public sentiment has shifted in recent years. This has led to increasing backlash toward immigrants and newcomers, as Canada’s international migration surged 15-fold under Trudeau.
Canada also faces challenges with excessive reliance on extractive industries and heavy dependence on exports to the U.S. With current tensions between Canada and the U.S., “reliance on both oil and exports remains a major feature of the country’s economy and has recently been exposed as a geoeconomic vulnerability,” according to the report.
To address these challenges, the report recommends investments in state capacity, economic diversification, and building greater democratic legitimacy through regional inclusion. It also suggests completing Trudeau’s unfinished goal of introducing a proportional representation system that includes greater geographic representation and inclusion of First Nations peoples.
The report concludes, “Polls now project a Liberal majority in the House of Commons.”
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Derick is an experienced reporter having held multiple senior roles for large publishers across Europe. Specialist subjects include small business and financial emerging markets.