Economic Outline

Economic Indicators

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 (+4.5%) and continued growing in 2022 (+3.3% - IMF) when the resources sectors helped offset slower growth in services. Private consumption (about 55% of GDP) was also one of the drivers. However, as higher borrowing costs will weigh on consumer spending while export growth diminishes in the near term amid deteriorating conditions in partner countries, the IMF expects GDP growth to moderate to 1.5% this year and 1.6% in 2024.

After skyrocketing in 2020, Canada’s debt-to-GDP ratio decreased moderately in 2021 and continued on a downward trend in 2022 (102.2% as per the IMF estimates). While the general government debt ratio is still high, after deducting the assets held by the Canada Pension Plan and the Quebec Pension Plan, the net debt ratio – at 47% of GDP - remains lower than that of other G7 countries. The IMF expects public debt to decrease in the forecast horizon, at 98.7% and 96.3% in 2023 and 2024, respectively. Similarly, the general government balance recorded a lower deficit in 2022 (-2.7% as opposed to 4% one year earlier) thanks to the withdrawal of most COVID-19 support measures, although living-cost relief related to the increase in energy prices is weighing on fiscal balances. Federal and provincial governments should scale back support as price pressures abate in 2023, reducing the fiscal deficit in 2023 (-1.2% of GDP) and 2024 (-0.6% - IMF). Meanwhile, inflation reached 6.9% in 2022, well above the upper limit of the Bank of Canada's target range (between 1 and 3%). Inflation should converge on target as underlying cost drivers ease and remaining supply bottlenecks clear, decreasing to 4.2% this year and 2.4% in 2024.

After touching record lows, the unemployment rate jumped due to the pandemic. However, the rate settled slightly above pre-pandemic levels in 2022 (5.3%), when larger-than-usual migration inflows from other countries helped to fill positions in some sectors. The IMF expects the unemployment rate to further decrease to 5.9% in 2023 before increasing to 6.2% the following year. Although Canadians enjoy a high per capita GDP (estimated at USD 57,827 in 2022 - IMF), 8.1% of the population lives in poverty (data 2021 Census of Population).

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