Canada's economy performed relatively well last year, but not enough to displace Germany as the top country in the Group of Seven big industrial nations, the Bank of Montreal says.
The chartered bank's annual report card for economic performance puts Canada slightly ahead of where it stood in 2010 cumulatively on five benchmarks, including unemployment and government deficits.
But the combined score of 81.6 is well back of Germany's 89.2 out of a maximum 100.
The scorecard suggests that the Harper government's contention that Canada leads the G7 in economic performance is somewhat of an exaggeration.
While Canada scores higher than the G7 average, exporting powerhouse Germany tops Canada in four of five major categories – jobless rate, inflation, government fiscal health and the current account balance with the rest of the world.
In the fifth category – credit rating – the two countries are tied with the top AAA grade.
"No. 2 is OK," said economist Benjamin Reitzes, who compiled the report. "We've been consistently in the upper echelons in the G7."
Mr. Reitzes noted that Germany has been more aggressive than Canada in reigning in government deficits. The European country has a deficit of only 1.2 per cent of gross domestic product, while Canada's combined federal-provincial shortfall is 5 per cent the size of the economy.
The other area in which Germany does substantially better is trade. The collapse of exports since the recession leaves Canada with a current account deficit of about 3 per cent of GDP, while Germany still enjoys a massive surplus.
Surprisingly, the U.S. is second last in the G7, mostly due to its high unemployment rate and budgetary deficit valued at 10 per cent of GDP, the worst in the group. Not such a surprise is that Italy, which is in the midst of a sovereign debt crisis, trails the group.
Canada averaged 7.5 per cent unemployment in 2011, and inflation was 2.9 per cent overall.
Mr. Reitzes said there's a chance Canada could regain the top spot next year if expectations for growth are borne out.
In a separate report released Wednesday, the Canadian Chamber of Commerce said Canada's economy is likely to continue to experience positive, if moderate, growth in 2012. It predicts output will grow by 2 per cent next year, followed by a 2.6 per cent expansion in 2013 – both numbers similar to the consensus reading of economists.
By comparison, Germany's economy is forecast to barely register any growth at 0.6 per cent next year.
The BMO report shows that Canada is doing well in relative – if not in absolute terms. It means that in a contest of struggling nations, Canada's problems are milder. On average, industrialized nations overall had a worst 2011 than 2010.
"Relative to the world we're in a decent spot, but this is the second lowest score since 1994, so our economy has performed better," Mr. Reitzes said.
The Chamber of Commerce outlook is that the trend of weak growth will continue in 2012, with Canada outperforming most industrialized countries.
Most of Canada's engines of growth have slowed, the business organization said, including consumer spending, housing activity, government spending, and exports, which while rising, remain below pre-slump levels. The bright spot in the grey picture is business investment.
The chamber pointed out that with Europe still a question mark, the outlook for Canada is subject to a downside shock if the continent fails to contain its sovereign debt problems. But Canada's domestic economy is not what it once was either, it added.
"Employment growth has stalled since mid-year, a sign employers are more cautious in hiring new workers given the uncertainty in the economic environment," the chamber said.
"Going forward, high household debt levels are likely to keep growth in spending relatively modest. Finally, there is not much pent up demand in Canada, especially for big ticket items."