Panorama econòmic

Economic indicators

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 and continued growing thereafter. GDP growth picked up in the first half of 2024 after a sluggish second half of 2023. Private consumption remained strong due to population growth but is weak on a per capita basis. Business investment rebounded, while housing investment continued to decline since early 2022. Overall, real GDP growth was estimated at 1.3% in 2024, supported by the normalization of monetary policy, some easing of fiscal policy, continued immigration (albeit slowing), and the expansion of the Trans Mountain pipeline. Real GDP growth is projected to strengthen in 2025 (+2% as per the IMF), driven by strong external demand supporting exports and lower policy rates fostering investment. However, private consumption growth is expected to slow due to lower population growth and a weaker labour market, before recovering in 2026. Nevertheless, on February 1, the U.S. announced 25% tariffs on all imports from Canada, except for oil, which would face a 10% tariff. The implementation was paused for a 30-day negotiation period. If the tariffs are enforced, the economic impact would be significant.

Concerning public finances, lower revenues and new spending measures have led to larger deficits in the fiscal plan, including a significant CAD 22 billion downward revision for 2023-24, bringing the deficit to CAD 61.9 billion. The 2024-25 deficit has also worsened by CAD 8.5 billion, now standing at CAD 48.3 billion (Royal Bank of Canada). The federal government has introduced several spending measures in recent budgets, prioritizing housing affordability and social spending. In November 2024, two new fiscal incentives were announced: a temporary GST/HST rebate for qualifying goods and a CAD 250 tax rebate to be issued in spring 2025. While increased government spending is only partially offset by efficiency gains and higher capital gains taxes, the overall fiscal stance is expected to remain largely unchanged in 2025-26. The debt-to-GDP ratio was estimated at 106.1% in 2024 by the IMF, with a downward trend expected over the forecast horizon (to 101.2% by 2026). According to official governmental figures, on an annual average basis, the Consumer Price Index (CPI) stood at 2.4% in 2024, down from 3.9% in 2023. Excluding energy, the CPI rose 2.6%, compared with 4.5% the previous year. The IMF projects inflation to hover around 2% this year and in 2026.

The unemployment rate rose from 5% at the start of 2023 to 6.5% in September 2024 (Bank of Canada). This increase was mainly due to more unemployed individuals struggling to find work and a growing number of new entrants to the labour force without jobs. Layoffs, however, contributed little to the rise. Although Canadians enjoy a high per capita GDP (estimated at USD 64,566 in 2024 – IMF), 9.9% of the population lives in poverty (data 2022 Census of Population).

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