Main Conclusions

• Countries around the world accumulated significant debt in an effort to support their economies during the COVID pandemic.
• From 2019 to 2021, Canada had the second-highest increase in its gross debt-to-GDP ratio out of 33 countries covered by the IMF, behind only Japan. Our gross debt-to-GDP ratio increased from 87.2% (2019) to 112.1% (2021), an increase of 24.9 percentage points.
• Given that Canadian governments accumulated more debt as a share of our economy than nearly every other country in our peer group, the expectation would be that Canada’s economy fared better than others during this period.
• Despite leading our peers—save for Japan—in the accumulation of debt, Canada did not out-perform our peer group in economic growth during the pandemic. Canada had the 11th lowest real GDP growth (5.2%) in 2020 and the 12th lowest real GDP growth (4.6%) in 2021.
• Canada also did not out-perform its peer group by achieving lower unemployment during the pandemic. In 2020, Canada had the third highest unemployment rate (9.58%) out of 33 industrialized countries, and the 8th highest unemployment rate (7.43%) in 2021.
• It is telling that the United States, which also had a marked increase in its gross debt relative to the size of the economy, markedly out-performed Canada on both measures in 2020 and 2021. Moreover, Ireland, which reduced its gross debt-to-GDP ratio, also outperformed Canada on both measures and, in fact, led the group of 33 industrialized countries in the growth of real GDP in 2020 and 2021.