Canada’s economy has suffered for decades from “terrible management” and it will take decades to fix it, a finance expert has argued.

Stephen Johnston, who works as Omnigence Asset Management’s director in Calgary, said Canada has become the “poster child for stagflation.”

Stagflation occurs when a country’s economy suffers from sluggish growth – stagnation – and rising prices – inflation – at the same time.

That combination “makes nobody happy,” Johnston told NowMedia video host Jim Csek, since it leads to lower living standards.

Explaining Canada’s precarious economic position, Johnston emphasized the country’s lack of manufacturing, loss of capital, fiscal deficits, overvalued housing, uncertainty about natural resources development and penchant for borrowing.
He discussed many of those points in a paper earlier this year titled “Is Canadian growth dead?”

“Basically, Canada is the poster child for stagflation,” he said. “Like, if you think, there was a list of 20 things you shouldn't do … And you certainly shouldn't do all of them. We've basically done all of them.”

Canadians – as well as foreigners – have been investing their cash, or capital, outside of the country “in earnest for the last decade,” Johnston said, describing that situation as “a travesty.”

“Without capital, you don't have affluence,” he explained. “I mean, it's very straightforward.”

What capital the country does have, he added, “is disproportionately focused on residential real estate.” In other words, people are spending their savings on homes rather than investing in, for example, Canadian startups.

Meanwhile, the country has “borrowed to consume,” a practice Johnston classes as “effectively stealing growth from the future.”

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