In the middle of last week I was invited to a consumer tasting by its organizer, Wines of South Africa. The small but sold-out walk-around event featured wines presented by half a dozen importing agents in the back room of the very much on-trend restaurant on Toronto’s Ossington Strip, Paris Paris. The venue and the vibe were a long way from the first South African tasting I attended nearly 20 years ago, which was a sit-down dinner at a mid-town tennis club. So were the wines.

South African wines have been popular in Canada, and the other big export markets like the U.S., U.K., and the Netherlands, since the end of apartheid and sanctions in the 1990s. But the kinds of wines that initially found a following here thirty years ago tended to be best described as cheap and cheerful. There are still a lot of those wines in the market here, but they weren’t at the tasting.

The South African wines at the Paris Paris tasting were sophisticated, fancy, and very much told the story of the high-end of the country’s production over the last decade and a half. The Western Cape’s wine regions have the advantage that they are close to its metropolis. As Barolo has Milan, and Priorat Barcelona, Stellenbosch and the other regions have Cape Town.

Cape Town is a global tourist magnet and a sunny retirement destination for wealthy Europeans. This means high-end restaurants and a hospitality infrastructure that support serious premium wines and establish reputations before they are exported to London, Amsterdam, or New York. 

One of the big pivots in South African wine has been the move toward Mediterranean red grapes. A pioneer of this shift in the ’90s and early 2000s was Charles Back, whose Fairview winery popularized these new plantings with Goats do Roam.

One of Back’s winemakers who went on to become one of South Africa’s leading wine innovators, Eben Sadie, makes Mediterranean grape red wines in the more recently established region of Swartland. Sadie’s 2020 Columella was the lauded special guest of the event.

The 2020 vintage is the twenty-first bottling of a wine that truly tracks the 21st-century arc of South African winemaking. It’s a blend and the properties of the mix of grapes have changed and evolved over the years, as has the technique in the cellar. What has remained is the dominance of Southern Mediterranean varieties: Grenache, Syrah, Mourvèdre, and Carignan.

Powerful, yet delicate: a symphony of dark fruit flavours raised by notes of violets. It was really good. It costs about $200 a bottle from Sadie’s Ontario agent, Lifford. If it’s not sold out by the time this piece is posted, it will be soon. In any event, having established that the iconic wine was, in fact, iconic, it was time to find something more budget-friendly.

Nicholas Pearce and Will Predhome are, respectively, a successful wine importer and a high-end wine event organizer who make wine under their own label. They were there pouring the Pearce Predhomme Chenin Blanc and Cinseault, both from 2021. The wines are made at the Radford Dale winery in Stellenbosch, an innovator in its own right.

Both cost a little more than a tenth of a bottle of Columella and make terrific bistro wines: round and fruit-forward, very easy going down. Pearce Predhomme wines are something of an industry secret in Toronto, though poorly kept since they increasingly find their way onto the by-the-glass section of the city’s wine lists.

At the next table was a thick crowd surrounding Bernard Stramwasser, of the Le Sommelier agency. He had brought boutique bubbles: Cap Classique Pieter Ferreira. Ferreira has been making his namesake label, with his wife Ann, since 2012, but is best known as the (sparkling) winemaker at Graham Beck.

South Africa got very good at making “traditional-style” sparkling wine, which they call Méthode Cap Classique (or MCC for short) during the 1980s when sanctions against apartheid stopped the import of Champagne. 

I made the mistake of skipping ahead to the next table, hoping the line would abate, but I waited too late and the supplies of small production Blanc de Blanc, Extra Brut, and Rosé were depleted when I returned. Next time.

The Ferreira wines were made from Chardonnay, Pinot Noir, or both, and while I may have missed them, I found a rewarding still version of each at the next table. The Buyers + Cellars agency was pouring the Paul Cluver Village Chardonnay 2021 and Village Pinot Noir 2020.

Paul Cluver’s wines are from elegant Elgin, southeast of Cape Town, and influenced by the cold South Atlantic. These are cool climate wines: crisp Chardonnay and bright red fruit Pinot Noir.

From Elgin, I went back west towards Cape Town to the Helderberg sub-region of Stellenbosch. Or so I learned when I found Courtney Stebbings of Genuine Imports pouring the Scions of Sinai wines at her table. I’d tried the 2021 Scions Granietsteen Chenin Blanc before when I spotted it on a list a few weeks before: it was a lovely mineral and citrus expression of South Africa’s trademark white grape. 

What proved to be a revelation was the 2021 Scions of Sinai Swanesang Syrah. If the Columella evoked the deep Mediterranean notes of Châteauneuf-du-Pape, then here was an African version of the black fruit clarity of the Northern Rhône. Food friendly, lifted and aromatic, fruit more red than black, the Scions Syrah truly sang.

Chenin Blanc was brought to the Cape by the Protestant Huguenots, who were fleeing religious persecution in 17th-century France. The Dutch who were already there welcomed the vine and did with it what they did best: make brandy. As a result there is more Chenin (or “Steen” as its called in Afrikaans) growing in South Africa than anywhere else in the world.

Alheit Vineyards makes one of South Africa’s more renowned white wines, made from 90 percent Chenin Blanc and 10 percent Sémillon. Stephen Cohen from the Groupe Soleil agency brought Albeit’s 2020 Cartology to the show. The wine is made from Chenin sourced across the Cape from parcels in Skurfberg, Malmesbury, Perdeberg, Bottelary, Upper Blaauwklippen, False Bay, and Tygerberg. And the Sémillon comes from old vines in Franschhoek. 

The point of Cartology is that Albeit scours the Cape for the best old white wine vines, and it shows with a deep honey note over lemony citrus that makes this a very rich yet refreshing wine. I cannot imagine a better companion to a long lunch.

The Columella was long gone when I circled back to the table hosted by the Lifford agency, but in its place was an old friend: the 2020 Raats Jasper Red, a Cabernet Franc-dominated blend made by the indomitable Bruwer Raats. The Raats family has a particular talent with Cabernet Franc, which is the companion red to Chenin, at least it is in the Loire Valley and Western Cape.

Raats makes a blackberry iron fist of a wine enveloped into a velvet glove of soft tannin and earthy aromatics. The Jasper’s long finish was the perfect way to end an evening or reacquaintance with the new South African wines; a sustaining warmth to take me out into the cold Ontario night.

The COVID-19 pandemic, and the economic disruptions it caused, appear to have left deep and long-lasting scars on Canada’s economy. 

The latest data from Statistics Canada measuring the size of Canada’s economy through to the end of 2022 shows we have shifted down to a lower growth path—and one that might be felt for years to come or potentially even be permanent.

Specifically, new quarterly data on Canada’s economy shows a clear and sizable gap between where we are now and where we were previously headed. I plot this below. In the fourth quarter of 2022, the economy is roughly 6.5 percent smaller than its pre-COVID trend.

This is a very large gap. It is equivalent to $180 billion per year in lost output. That’s $4,500 per person in Canada per year. It’s larger than Canada’s entire energy sector. 

While this outcome was foreseeable, it wasn’t a foregone conclusion.

More than a year ago, writing for Maclean’s Charts to Watch in 2022, I raised a concern that “future growth may, unfortunately, be lower for longer.” Whether COVID permanently damages Canada’s economy or whether workplace innovations (like remote work) and policy responses (like childcare) could boost productivity above pre-COVID trends would be revealed by this data.

“Where our economy goes in 2022 will give early indications about which of these two possibilities may be likely,” I wrote. More than a year later, with the data now in, it appears the worse of the two occurred.

Understanding what factors led to this outcome is critical.

This is neither a novel development, to be clear, nor one unique to Canada.

Recent research suggests recessions in general can permanently shift an economy to a lower growth path. The United States experienced this following the financial crisis, for example. Canada was not spared then either. A broad investigation of nearly two dozen OECD economies found countries suffered a permanent ratchet down with only a few examples.

Even normal run-of-the-mill recessions—as opposed to large-scale ones or those following financial crises—may exhibit this pattern.

There are many potential causes. Losing a job may lead some, especially older workers, to permanently withdraw from the labour market. Lasting negative health effects of the pandemic may also be a factor. Investment could also fall, lowering the pace of capital accumulation like machinery and equipment. And productivity growth may slow.

To measure how important each of these factors might be for understanding Canada’s current situation, I use a technique known as “growth accounting”. The intuition is simple.

Labour and capital are critical inputs into the production of nearly all goods and services throughout the economy. Technology, skills, and knowledge each determine how much output we get for any given number of workers and machines—that’s our productivity. Each of these is (imperfectly) measurable, so we can estimate how much increases in employment tend to increase GDP, or how much decreases in capital investment affect GDP, and so on.

I do just that and find lagging productivity growth is the key.

Of the overall drop below pre-COVID trends, productivity accounts for roughly 4 percentage points of the total. That’s about 60 percent of the overall gap between where we are now and where we were previously headed. Productivity growth has been so poor recently it has actually been negative. I estimate it is roughly back to the same level it was at in early 2019.

Lagging investment levels and the country’s overall capital stock, interestingly, account for only a small fraction. Some have pointed to lagging business investment as a central challenge for Canada. And while this is certainly important, it doesn’t appear to account for much of why we remain so far below trend.

It’s therefore labour that accounts for the rest of the decline. I estimate total hours worked in Canada is about 4.4 percent below its pre-COVID trend and accounts for a third of the gap between Canada’s GDP and its prior trend. 

It’s not that we’re working fewer hours individually (though we are a little bit). It’s mainly that there are fewer workers overall due to Canada’s ageing population. 

By the end of 2022, 62 percent of the population was aged 18 to 64 years—that’s down from 64 percent five years earlier, and also below its pre-COVID trend. These small changes can have large effects, given how important labour is to produce almost everything.

Can we boost our longer-term growth rates?

There are options: we can increase our inputs or we can increase our productivity. Demographic challenges are hard to overcome, however. Immigration can partly compensate but comes with considerable challenges of its own. 

That leaves increasing business investment and productivity growth. The list of areas where we can turn to improve this is long. Increasing technology adoption, growing our internal and international trade flows, boosting the level of competition within several protected sectors, enhancing skills training, exploring and enacting tax reforms, easing regulatory burdens, improving transport infrastructure, and so much more, could all yield dividends. 

Each deserves a deeper dive than I can provide here. But one thing is clear: if we cannot reverse recent trends, Canada’s economy risks falling even further behind.