Canada's economic future in two colours, grey and green

RBC Economics highlights the challenges ahead in the 2020s

Canada's economic future in two colours, grey and green
Steve Randall

Summing up the new decade in colours would be easy – grey and green.

They represent the “greying” of the population as it ages and the shift to the greener economy exacerbated by climate change and the changing demands of consumers and investors.

In a new report, RBC Economics highlights the challenges for the Canadian economy in the next 10 years.

With Canadians living longer and having fewer babies, the population is aging to the point where the median age in Canada will rise to 42.3 years by 2030, up from 40.8 years now and 39.8 years in 2010.

This, the report says, will have significant impact on society with greater demands on healthcare, changing housing requirements, and older-focused leisure activities.

But there will also be a squeeze on the country’s finances with fewer younger workers paying in while those taking out is rising. The report estimates that, by 2030, there will be 1.7 working age Canadians for every youth and senior, down from 2.3 in 2010.

Immigration should help offset some of the pressure but the burden for governments will be clear, both in finances and in provision of seniors housing including nursing homes.

On the plus side, homes currently occupied by Baby Boomers should be released as the decade progresses, easing supply and price issues for younger generations.

Going green
Along with the aging population, the drive towards a greener economy will be a major factor in the 20s.

With Canada among the countries seeing clear effects of climate change, with the average temperature rising at twice the global rate, challenges including impact on farming and housing will require answers.

There is also the global transition away from fossil fuels, impacting Canada’s energy sector, although crude oil production is expected to rise by 2020 while Canadian producers will be producing oil more cleanly. Technology and transportation innovations will weaken domestic demand for energy.

RBC Economics says that insurers and the insured will be heavily impacted by rising costs related to climate change in this decade.

The report - - also highlights the increasing role of green financing and how employment will be impacted by technology.