Is Canada's economy the worst in the G7 — or the best? Depends who you ask

They can’t both be right. Except, in some ways, they are.

Poilievre’s belief that Canada falls to the bottom of the heap when it comes to a raft of G7 indicators exposes one side of the country’s economic standing. The prime minister’s assertion that Canada comes out on top on a series of other metrics shows another.

And the caveats that make direct comparisons troublesome — measurement inconsistencies, population differences, fluctuations over time — are another story.

Indeed, the contrast between both leaders is “almost humorous,” said Douglas Porter, the chief economist at BMO.

“It just goes to show how you can really weave almost whatever story you want about an economy, because there are so many different ways to look at it,” Porter told the Star.

Here’s a dive into the claims and what each leader’s framing says about their message.

Poilievre’s gloomy assessment

Listen to any public remarks from the Conservative leader and his message is consistent: Canada often ranks the worst among G7 nations, which also includes the United States, France, Germany, Italy, Japan, and the United Kingdom. (The European Union is included as a nonenumerated member.)

When it comes to household debt, housing affordability, business investments per worker, grocery inflation and unemployment, Poilievre said in a Toronto speech earlier this month, “why is it that we’re doing so much worse than all those other countries?”

While Poilievre may blame the Liberals, on several of those indicators, he is largely highlighting the truth, economists say.

“When we talk about household debt, housing affordability, these are issues for consumers. Those are absolutely true,” said Pedro Antunes, the chief economist at Signal49 Research.

“Investment per worker — that is absolutely true, and that is a massive problem for Canada, because that is what’s driving our productivity problem.”

Housing affordability can be a bit “tricky,” Porter said, depending on which metric you use and the factors you consider. Based on the most recent Organisation for Economic Co-operation and Development (OECD) data for which comparable information is available, home prices in Canada outpaced incomes by about 36 per cent since 2015, with other G7 countries posting lower figures.

Canada having the “second highest” unemployment rate in the G7, another Poilievre claim, is also broadly true: Canada’s rate was 6.7 per cent in March, compared to the rate of 7.9 per cent posted by France earlier this year.

Where Poilievre runs into trouble are his claims that Canada has the “worst food price inflation” in the G7, because while Canadians are undoubtedly struggling, grocery inflation can be volatile.

“I know it feels really bad,” said Porter, but over time, “we’re not the worst, we’re not the best.”

Food prices may be high in Canada right now — food bought at stores rose 4.4 per cent on a yearly basis in March — but within the last year prices have, at times, risen higher in countries like the United Kingdom and Japan.

Carney’s claim, in which he said last fall that Canada’s food inflation rate is the G7 average, may be a bit closer to reality, Porter said.

Carney’s rosy outlook

The Carney Liberals ran on a general election campaign that pledged to turn Canada into the “strongest economy in the G7,” and the prime minister said in the House of Commons last week that the International Monetary Fund (IMF) confirmed that “Canada will have the second-fastest growth” within the grouping this year.

It’s true that in the IMF’s latest world economic outlook, when only G7 nations are considered, Canada’s GDP growth in 2025 is projected to be 1.7 per cent, just behind the United States at 2.1 per cent.

“Our estimate for Canadian growth this year is one per cent, others are saying slightly better than that,” BMO’s Porter said. “That’s pretty modest in the grander scheme of things, and it’s only a couple tenths of a per cent above what’s expected in Europe and Japan. One slip, and we could fall down the leaderboard very, very quickly.”

Carney is correct about one of this other claims: that Canada has the highest credit rating in the G7 (both Canada and Germany have AAA ratings, though Germany holds that credit status across more agencies.)

The prime minister also frequently says that Canada has the lowest net debt-GDP ratio in the G7, which is technically true.

“Gross debt is fairly high, but the net debt … is a lot weaker than many other OECD or G7 countries,” said Antunes, noting that assets from public pension plans are subtracted from net debt calculations, lowering Canada’s ratio.

As for one of Carney’s final claims — that Canada has “the lowest deficit in the G7” — the situation is more complex.

“The reality is in Canada you can’t just look at the federal government. The provinces have a lot of spending and taxation power,” Porter said. “If you combine the federal government with the provinces, we’re looking at a budget deficit this year that’s about three-and-a-half per cent of GDP, we think.”

Doing so brings Canada more in line with the “Germanys and Italys of the world,” said Porter, adding that Canada having the lowest deficit “might technically be true at the federal level, but even there, Japan might actually challenge us this year.”

The metric is the message

The conclusion from all this, Antunes said, is that Poilievre, true to his political agenda, is zeroing in on the structural problems affecting Canadians and their bottom line.

“He is trying to get at the issues that consumers are facing” like affordability and prosperity, the economist said, in his bid to underscore that “households are having a tough time.”

Carney, meanwhile, is aiming to “look ahead, and he’s trying to say that we have the fiscal room to essentially do more in terms of attracting investment,” Antunes said.

For Porter, politicians should know that no indicator is a perfect measurement of a nation’s strength.

“You really do have to look at the whole picture. And the whole picture, of course, is that the truth is somewhere in between these two,” Porter said. “Obviously the two sides have chosen the bright side of the moon and the dark side of the moon, in this case. But it’s still the moon.”