This disappointing performance is true even after one adjusts for the persistent strength of the Canadian dollar and the marked decline in our international competitiveness since the early 2000s.
While it is possible that competitiveness or foreign demand, which the Bank proxies with a foreign activity measure (FAM), could have been mismeasured, sagging competitiveness seems to be a less obvious candidate.6 Neither the dollar, nor competitiveness defined more generally (i.e., in terms of productivity and wage gaps adjusted for the exchange rate), has shown any evident break in trend.