National Bank Financial - Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Canadian Investment Regulatory Organization (CIRO) and the Canadian Investor Protection Fund (CIPF), and is a wholly owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA). The information contained herein has been prepared by Eric Van Enk, Associate Portfolio Manager and Wealth Advisor at NBF. I have prepared this article to the best of my judgment and professional experience to give you my thoughts on various financial aspects and considerations. The opinions expressed represent solely my informed opinions and may not reflect the views of NBF. The particulars contained herein were obtained from sources we believe to be reliable but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed do not necessarily reflect those of NBF.
The One Thing
May 24 2025, Insight from Eric Van Enk, Wealth Advisor & Portfolio Manager
The One Thing | Kunz Financial Group
If Prime Minister Carney is serious about national unity and getting the country back on track after a decade of floundering in the economic wilderness, he will make common sense policy decisions to address this week’s chart. Canadian GDP is shown in the red-doted line while U.S. GDP is shown in the solid blue line. As you can see, Canadian GDP is unchanged since 2017 on a per capita basis while U.S. per capita GDP has grown by ~15% over the same time frame. Governments must make a concerted effort to avoid growing a country’s GDP over a 7-year period which is exactly what the Trudeau Liberals did by dramatically increasing regulation and the size of the federal government as well as shunning investment in LNG and other resource-based investments.
Canada: GDP per capita at a standstill
Real GDP per capita
Source: National Bank Financial
The inability to grow Canada’s economy on an absolute and relative basis has many negative impacts on Canadians. For example, our purchasing power has been eroded relative to that of the U.S. The average U.S. citizen is wealthier with a higher level of discretionary spending – allowing Americans to spend more on travel, education, vehicle or home purchases, etc. Stagnant Canadian GDP has also had a substantial negative impact on the Canadian dollar which hurts Canadians given we import most of what we purchase. A lower Canadian dollar contributes to higher inflation all else equal, again, because we import most of what we purchase. Stagnant GDP also has a negative impact on tax revenues and our ability to fund social programs. If we assume tax rates stay the same, higher GDP translates into higher tax revenues.
What about our national debt? Growing our GDP reduces the size of our debt relative to GDP – this means we can grow ourselves out of debt by increasing tax revenues and making debt payments a smaller proportion of our budget, leaving room for additional spending on programs like education and healthcare.
An east-west oil pipeline is one example of a commonsense policy which would positively impact the Canadian dollar and our standard of living. Eastern Canada currently imports a substantial amount of foreign oil which could be displaced by oil produced in western Canada. This one simple policy decision would have many positive impacts for the Canadian economy. First, it would improve our balance of trade which would have a positive impact on the Canadian dollar. Second, it would create jobs and investment in Canadian infrastructure which would increase GDP and tax revenue in Canada. Finally, it would diversify the export market for our oil, which would likely translate into higher realized prices, again increasing royalty and tax revenues.
From an environmental perspective, would we rather have tankers importing foreign oil to Canadian shores or our own oil transported via pipeline? Statistically, what has a higher probability of environmental disaster, tankers or pipelines? Which country has superior environmental and human rights standards, Canada or Saudi Arabia?
What about Canadian unity? A pipeline would obviously please Alberta and Saskatchewan, but what about the rest of the country? Federal equalization via transfer payments means that any economic benefit gained by ‘have’ provinces such as Alberta and Saskatchewan are automatically shared with the rest of the country. There are many other examples of policies which can have an immediate, positive impact on our economy and standard of living and I sincerely hope that Prime Minister Carney, with his distinguished resume in finance and economics, doesn’t waste time in correcting the policy mistakes of his predecessor.
Eric Van Enk, Wealth Advisor & Portfolio Manager
National Bank Financial – Wealth Management
Medicine Hat, AB
