Levers of growth
Global economic growth is expected to remain modest in the coming years. Despite the global situation, growth is continuing in Québec and is driven by household consumption and exports. Even more significant, this solid performance of the Québec economy is occurring in the midst of a slowdown in most of the provinces, in Canada and elsewhere in the world.
In the coming year, job creation will continue to drive household consumption. In addition, growth in exports will be fuelled by the strengthening U.S. economy and the favourable exchange rate. Business investment is also expected to make a greater contribution to economic expansion.
Exports at a high: one of the main engines of economic growth
Total exports in Québec
(billions of dollars, in real terms)
Levers of growth
Québec is also facing significant demographic challenges that will have major impacts on the labour market.
Economic growth depends on:
- an increase in the population aged 15-64, who constitute the pool of potential workers;
- employment growth, reflected in an increased rate of employment, or, in other words, an increase in the proportion of the working-age population that is employed;
- improved productivity, that is, increased production per worker.
In Québec, the increase in GDP prior to 2014 was based more or less equally on the three factors listed above. However, the pool of potential workers recently stopped growing.
A higher employment rate and increased productivity are therefore the main factors that Québec must rely on to drive economic growth.
In addition to taxation, the government has a number of other tools at its disposal to drive growth. For example, it can take equity interests in projects and carry out financial transactions in the form of loans, loan guarantees or subsidies.
For its financial transactions, the government can count on Investissement Québec, along with its subsidiaries, such as Ressources Québec, whose budget envelopes for financial transactions are drawn in particular from:
- its own funds;
- funds that it is responsible for managing, as the government’s mandatary, such as the Economic Development Fund and the Mining and Hydrocarbon Capital Fund.
These tools can be used to act on all the determinants of growth, such as:
innovation, to improve the productivity and performance of businesses;
the alignment of training with employment to meet labour market needs;
the business environment, through, for example, more competitive taxation to give companies the ambition and means to grow, develop and invest.
These actions require the commitment and coordination of all government actors, educational institutions, the business commmunity, businesses, and entrepreneurs themselves. We must make meeting these challenges a priority.