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, 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.

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