Canada: Economic outline
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Following the unprecedented global crisis prompted by the spread of the COVID-19 pandemic - which led to the largest economic contraction since 1945 - the Canadian economy rebounded in 2021, recording an estimated GDP growth of 5.7%. Rising global oil prices helped the recovery, together with the easing of containment measures that supported internal demand. The IMF expects the country to grow faster than the pre-pandemic trend, with a forecasted growth of 4.9% this year and 2.6% in 2023, although uncertainty remains at global level due especially to the insurgence of the Omicron variant of the virus.
After skyrocketing in 2020, Canada’s debt-to-GDP ratio decreased moderately to 109.9% in 2021 despite the fact that the government increased its borrowing in order to make the necessary temporary investments to stabilize the national economy amidst the extraordinary circumstances of the COVID-19 pandemic. The IMF expects the debt to follow a downward trend in 2022 (103.9%) and 2023 (100.2%). Similarly, the general government balance recorded a deficit of 6.6% in 2021, although further withdrawal of pandemic support measures should contribute to a reduction of the deficit (projected at 2.7% this year and 1% in 2023). In the 20 years before the pandemic, goods inflation averaged only 1.4%. However, according to the latest figures by the Bank of Canada, supply constraints have led to higher inflation: the average inflation rate of goods in 2021 has been 4.4%, much higher than that of services, which has been 2.1%. Inflation should ease as energy price pressures abate and supply bottlenecks are resolved through 2022, with an IMF forecast of 2.6% (followed by 2% the year after).
After touching record lows, the unemployment rate jumped due to the pandemic. In 2021, the unemployment rate remained elevated (7.7%) and over a quarter of those unemployed have been out of work for half a year or more (up from 16% before the pandemic). Strong output growth will support increased labour demand and help pull unemployment down towards pre-pandemic levels: the IMF projects a gradual decrease, at 5.7% this year and 4.9% in 2023. Although Canadians enjoy a high per capita GDP (estimated at USD 51,713 in 2021), 1 in 7 (or 4.9 million) people in Canada live in poverty.
Main Indicators | 2019 | 2020 | 2021 (e) | 2022 (e) | 2023 (e) |
GDP (billions USD) | 1,741.58 | 1,644.04e | 2,015.98 | 2,189.79 | 2,306.07 |
GDP (Constant Prices, Annual % Change) | 1.9 | -5.3e | 4.7 | 4.1 | 2.8 |
GDP per Capita (USD) | 46,400e | 43,295e | 52,791 | 56,740 | 59,126 |
General Government Balance (in % of GDP) | 0.3 | -8.1e | -6.6 | -2.7 | -1.0 |
General Government Gross Debt (in % of GDP) | 86.8 | 117.5e | 109.9 | 103.9 | 100.2 |
Inflation Rate (%) | 1.9 | 0.7e | 3.2 | 2.6 | 2.0 |
Unemployment Rate (% of the Labour Force) | 5.7 | 9.6e | 7.7 | 5.7 | 4.9 |
Current Account (billions USD) | -35.71 | -29.89 | 10.56 | 4.63 | -17.62 |
Current Account (in % of GDP) | -2.1 | -1.8 | 0.5 | 0.2 | -0.8 |
Source: IMF – World Economic Outlook Database, 2016
Note: (e) Estimated Data
Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
Canadian dollar (CAD) - Average Annual Exchange Rate For 1 GHS | 0.33 | 0.30 | 0.28 | 0.25 | 0.24 |
Source: World Bank, 2015
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Latest Update: June 2022