play : first, a decrease in total fertility below the replacement rate of 2. 1 children per woman and second, a considerable increase in life expectancy. we can trace the beginning of this shift to northern european countries as far back as the 1870s, where fertility rates have been on a downward trend ( chart 3 ). in canada, total fertility rates peaked in the early 1960s, during the baby boom, and then plummeted to where they are today. for 40 years now canada ’ s total fertility rate has been below 2. 1. at roughly the same time in the 1870s that fertility rates dropped, we saw large declines in mortality, mostly of children. as the once commonplace death of a child is thankfully far in the past, at least in advanced economies, the big change we see now is in the significant increase in life expectancy. consider this : canadians born in 2000 could expect to live almost three decades longer than those born in 1900 ( chart 4 ). more people living longer swells the ranks of the non - working population and changes the ratio of older non - working people relative to working - age people. this ratio is commonly referred to as the “ old - age dependency ratio. ” looking at the expected evolution of this ratio, an important conclusion is that the aging of the population has begun and it will soon accelerate. the crunch will be unprecedented in history, both in scope and size ( chart 5 ). in canada, by 2031 about one in four people will be over 65. 3 as for those over 80, they are the fastest - growing segment of the older population, a group that, relative to 2000, will have nearly doubled by 2026 and quadrupled by 2051. 4 canada is not the only nation getting older ( chart 6 ). population aging is common across advanced economies. all g - 7 countries have seen a drop in the total fertility rate and an increase in life expectancy. canada ’ s situation is more favourable than that of other g - 7 countries such as japan. we are not aging as early or as fast. two reasons for this difference are that more canadian women are in the labour force and we have much higher rates of immigration. 5 f. t. denton, c. h. feaver, and b. g. spencer 2005 as cited by charles m. beach in “ canada ’ s aging workforce : participation, productivity, and living standards, ” in a festschrift in honour of david dodge, bank of

other commodity prices rose in the years before the 2014 oil price shock, so did our dollar, making our non - commodity exports to the united states less competitive and reinforcing the ongoing shift from manufacturing to services. as i mentioned earlier, this is likely reducing the level of investment. now, let ’ s look at the structural factors that affected business investment during this period. i ’ ll focus on two : demographics and productivity growth. population aging under way across most advanced economies has led to a marked slowdown in labour force growth, and this has been a strong headwind to investment. in canada and the united states, for example, the annual growth rate of the labour force slowed from around 1 1 / 4 per cent in 2006 to less than 1 / 2 per cent in 2016. 11 this decline has reduced potential output growth and investment demand. low productivity growth since 2007 has also been a headwind on business investment. however, while demographic shifts are fairly predictable, it is less clear how much of the decline in productivity growth reflects a structural change and how much is a cyclical response to the subdued recovery. for example, the loss of existing firms and the low creation rate of new firms during and after the great recession have not only directly reduced investment but also impaired the dynamism of the private sector, causing persistent, adverse effects on productivity growth. 12 5 / 9 bis central bankers'speeches all of these challenges have increased uncertainty about the strength of future demand and weighed on business confidence. as a result, canadian firms have acted cautiously in their investment decisions, despite operating close to capacity in some industries. in some cases, they have met any increases in demand by hiring more labour. so that ’ s how we got to where we are. let me now take you through our most recent economic outlook for canada. the outlook for the economy and investment let me start by making two important points from our january monetary policy report and march 1st policy rate announcement. first, our outlook since mid - 2016 for gradually increasing global growth is largely consistent with what we have seen in the data. second, heightened concerns about prospective protectionist measures mean that we should not presume that the economic disappointments we have experienced since the great recession are over. that said, the adjustment to the decline in commodity prices is progressing, and activity in resource - related industries appears to have bottomed out. real gdp growth is expected to pick up from 1. 4 per cent in 2016 to slightly above 2. 0 per