Canada Economic Outlook
High standard of living:
Canada has a developed market economy, which is among the 10 largest in the world in nominal GDP terms. Elevated purchasing power and the high quality of public-service provision contribute to Canada frequently being considered to have one of the highest standards of living in the world.
Natural resource abundance:Canada is rich in natural resources, notably oil sands, which make it the world's fourth-largest oil producer. The country also has significant reserves of natural gas, minerals, and timber. Moreover, Canada is one of the largest exporters of agricultural products globally. Key products include grains, oilseeds, and livestock, with the agri-food sector extending into food processing and distribution. This unusually large primary sector worth well over 10% of GDP makes Canada atypical among major advanced economies.
Manufacturing and services sectors:Canada's manufacturing industry has particular strengths in vehicles, aircraft, and industrial machinery, with key manufacturing hubs located in Ontario and Quebec. That said, the economy is dominated by the services sector, which accounts for around four-fifths of total employment and three-quarters of GDP. Key services exports are travel, financial and IT services, with Toronto acting as the country's major financial center.
Free trade promoter:Trade is a critical component of Canada's economy, with the U.S. being by far its largest trading partner. Canada actively engages in free trade agreements, including the CETA (Comprehensive Economic and Trade Agreement) with the European Union and the CPTPP with other Pacific-rim economies. However, the most crucial free trade deal for Canada is the USMCA (United States-Mexico-Canada Agreement).
Challenges:A reliance on the U.S. economy—which has been a boon in recent years given a strong U.S. performance—also poses a risk to Canada's outlook. Moreover, housing affordability is a growing concern; average house prices have more than doubled since 2011, and household debt is the highest in the G7. Balancing the desire to exploit the country's large energy resources with climate protection goals will also be a challenge. Moreover, the large industrial subsidies implemented by the U.S. in 2021 could threaten Canadian manufacturing: the Canadian government has announced subsidies for the clean energy sector in response.
Canada's economic outlook:Over the last decade, GDP growth has been around the G7 average, but it is forecast to average slightly above the G7 average in the coming years. High rates of immigration, enhanced commercial ties with the EU and pacific-rim economies and the strong expansion in the neighboring U.S. will provide support.
Canada's Macroeconomic Analysis:
Nominal GDP of USD 2,161 billion in 2022.
Nominal GDP of USD 2,143 billion in 2023.
GDP per capita of USD 53,619 compared to the global average of USD 10,589.
GDP per capita of USD 55,627 compared to the global average of USD 10,589.
Average real GDP growth of 1.9% over the last decade.
Average real GDP growth of 1.8% over the last decade.
Sector Analysis
In 2018, services accounted for 74% of overall GDP, manufacturing 10%, other industrial activity 14%, and agriculture 2%. Looking at GDP by expenditure, private consumption accounted for 55% of GDP in 2021, government consumption 22%, fixed investment 24%, and net exports -1%.International trade
In 2021, manufactured products made up 42% of total merchandise exports, mineral fuels 26%, food 14%, ores and metals 9% and agricultural raw materials 5%, with other categories accounting for 4% of the total. In the same period, manufactured products made up 76% of total merchandise imports, mineral fuels 6%, food 9%, ores and metals 4% and agricultural raw materials 1%, with other goods accounting for 4% of the total. Total exports were worth USD 598 billion in 2022, while total imports were USD 582 billion.Main Economic Indicators
Economic growthOver the last decade, Canada's economy benefited from brisk population growth, close ties to a robust U.S. economy, strong natural resource sectors and improved trade ties with Asian and European economies thanks to participation in new free trade deals. GDP growth frequently clocked over 2% per year, above the G7 average. Following a contraction in 2020, post-pandemic recovery in 2021-2023 was supported by fiscal stimulus and rebounding global demand. To read more about GDP growth in Canada, go to our dedicated page.
Fiscal policy
Canada maintained a relatively stable fiscal position from 2013 to 2019 thanks to prudent economic management. However, the COVID-19 pandemic in 2020 led to a significant increase in the deficit due to emergency spending and economic support measures. That said, this deficit was largely wiped out by 2023 as emergency spending disappeared and the economy enjoyed a robust post-pandemic recovery. Find out more on our dedicated page.
Unemployment
Canada's unemployment rate over the last decade generally remained within a moderate range, reflecting the country's stable and growing economy. The COVID-19 pandemic led to a significant spike in 2020, but a strong recovery followed, and by 2022, the rate was below pre-pandemic levels, indicating the resilience of Canada's job market. For more information on Canada's unemployment click here.
Inflation
Canada maintained a relatively stable inflation rate from 2013 to 2019, averaging close to 2%. The country's inflation management strategies, including a strong monetary policy framework, contributed to this stability. However, the COVID-19 pandemic led to a temporary rise in inflation, driven by supply chain disruptions and government stimulus measures. By the end of 2022, the inflation rate had started to recede, indicating the effectiveness of the Bank of Canada's measures in controlling price increases. Go to our Canada inflation page for extra insight.
Monetary Policy
Over the last decade, Canada's central bank policy rates experienced cycles of reduction and increase. The rates were lowered to near-zero during the COVID-19 pandemic to support the economy. However, as the economy began recovering, the central bank increased rates to manage inflationary pressures. See our Canada monetary policy page for additional details.
Exchange Rate
The Canadian dollar's exchange rate has depreciated overall in the last decade, but has seen substantial volatility in response to fluctuations in global oil prices (oil is Canada's key merchandise export), interest rates and domestic economic conditions. For more info on the Canadian dollar, click here.
Economic situation in Canada
In Q3, GDP growth eased to 1.0% in quarter-on-quarter annualized terms, the weakest rate since Q4 2023. The third quarter saw robust public and private spending partly counterbalanced by a slowdown in non-farm inventory accumulation, reduced business investment and a decline in exports. Initial estimates indicate a 0.1% month-on-month increase in GDP for October, fueled by growth in the retail, transportation and real estate sectors. However, these gains were tempered by declines in construction and mining. October’s GDP expansion aligns with our panelists’ expectations for faster economic momentum in Q4, supported by lower interest rates and the temporary waiver of the goods and services tax from mid-December. On the external front, U.S. President-elect Trump recently threatened 25% tariffs on Canadian goods; such a move would significantly dampen Canadian economic activity.Canada Economic Forecasts
Projections out to 2034.59 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 43 expert analysts.
Want to get insight on the economic outlook for Canada in the coming years? FocusEconomics collects projections out to 2034 on 59 economic indicators for Canada from a panel of 43 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Canada economy. To download a sample report on the Canada's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.
Canada Economic Indicators
Frequently Asked Question about Canada's Economy
What is Canada's major industry?
What is Canada's biggest export?
Is Canada doing well economically?
Canada's main industry is the services sector, which dominates its economy, including finance, real estate, and business services. Additionally, it has significant natural resource industries like oil and gas, forestry, and mining.
Canada's biggest export is crude oil, particularly to the United States. This is a significant part of Canada's economy, reflecting the country's substantial oil reserves, primarily in Alberta's oil sands, and its status as one of the world's top oil producers and exporters.
Canada's economy is performing well, marked by a strong, diversified economy, low unemployment, and robust exports. Other economic strengths include abundant natural resources, an educated population, and strong trade ties. However, it faces challenges relating to housing affordability and household debt.