As part of our ongoing commitment to providing businesses with actionable insights, the 2024 Benchmark Symposium offered valuable perspectives on the economic outlook for the coming year. Aimed at helping businesses navigate uncertainty and plan strategically, this year’s presentation by Ivey Business School Professor Adam Fremeth provided a high-level overview of critical trends that will impact businesses in 2024, particularly in terms of labor, inflation, and global economic trends.
1. Economic Resilience With Increased Risks
Despite showing signs of resilience in the face of recent global challenges, the Canadian economy is starting to weaken. For businesses, this means navigating a more volatile economic environment, with decisions around hiring, capital investment, and operational budgets requiring greater caution.
2. The Impact of AI and Labour Strikes
Two of the most significant trends shaping the labor market are the rise of artificial intelligence and an increase in labor strikes. AI adoption is transforming industries, offering efficiency gains, but also raising concerns over job displacement. At the same time, inflation has triggered a wave of labor strikes, as workers demand higher wages and better working conditions. This dynamic presents both challenges and opportunities for businesses. Organizations will need to balance investing in AI-driven technologies with strategies to reskill and upskill their workforce.
3. Policies and Inflation: A Balancing Act
Inflation remains a critical issue for businesses, with the Bank of Canada recently cutting interest rates in an attempt to stabilize the economy. The presentation noted that while inflation rates appear stable for now, uncertainties remain. Businesses should stay vigilant to potential shifts in monetary policy, particularly with concerns about protectionism rising. Trade tariffs and regulatory shifts could increase costs, further impacting operational margins.
4. Global Economic Comparison: Canada Falling Behind
On a global scale, Canada is lagging behind its G7 peers in terms of GDP growth and productivity. While immigration has boosted population growth, this hasn’t translated into significant per capita gains. In contrast, the U.S. economy is thriving, and emerging markets like India and Vietnam show strong growth potential. For Canadian businesses, exploring opportunities in thriving foreign markets may offer a solution to stagnating domestic growth.
5. Structural Challenges and Predictions for the Future
Canada faces structural challenges that threaten long-term economic stability. Dr. Fremeth’s presentation highlighted concerns about high debt levels and declining productivity. By 2030, Canada could face a GDP per capita shortfall if these issues are not addressed. To mitigate this, the country needs to focus on improving productivity, enhancing investment in strategic industries, and leveraging immigration more effectively.Another key factor for businesses to monitor is the upcoming elections in both Canada and the U.S., which could significantly affect the economic landscape. Shifts in political leadership and policies could either ease or exacerbate current economic pressures.
For businesses, the insights provided at the Benchmark Symposium highlight the importance of strategic planning and adaptability. Key actions to consider include:
1. Monitor AI Integration: Embrace AI to improve efficiency, while investing in workforce development to navigate labor shifts.
2. Prepare for Inflation Fluctuations: Stay informed on potential changes in interest rates and tariffs which could impact costs.
3. Diversify Market Opportunities: Explore growth opportunities in emerging foreign markets, where economic conditions are more favorable.
4. Enhance Productivity: Focus on boosting productivity through technology, innovation, and better workforce management to stay competitive in a slow-growing economy.
The 2024 economic outlook presents both challenges and opportunities for businesses. By understanding these trends and preparing accordingly, businesses can navigate the coming year with greater confidence.