A return to growth in Canada’s resource-rich provinces and continued robust performances in the rest of the country will support strong economic growth in 2017, according to The Canadian Long-Term Outlook: Mid-Year Update released by The Conference Board of Canada.

The Canadian economy will see solid but short-lived growth well above 2% in 2017, but this is a temporary acceleration as economic growth beyond this year will increasingly be constrained by an aging population and tepid productivity growth. The economy posted average annual growth of 2.7% during the two decades leading up to the 2008/09 recession, but over the next 20 years of growth will be much more modest, averaging 1.8%,

Employment began to pick up during the second half of 2016 and job creation has remained strong in 2017. Labor markets across the country will gradually tighten over the next 20 years due to the aging of the population and the slowdown in labor force growth, the report predicts. Between 2020 and 2040, the exit of the babyboom generation from the workforce will push up wages as businesses compete for skilled workers.

“This year’s ... real GDP growth is a temporary reprieve from Canada’s future slow growth trajectory,” said Matthew Stewart, associate director, National Forecast, at The Conference Board of Canada. “By leaving the labor force in large numbers, the baby boom cohort will transform Canada’s economy, shrinking growth in the pool of available labor and slowing the economy’s trend growth (referred to as potential growth) over the next 20 years. This will have major implications for Canadians, businesses, and all levels of government.”