Economy of Canada

Canada has a highly developed mixed economy, making it the ninth-largest in the world. With a nominal GDP of about US$2.39 trillion, the country plays an important role in global trade. Canada's economy is very connected to the world, with trade in goods and services reaching over $2 trillion in recent years. Much of this trade happens with the United States, which is Canada's biggest trading partner.

The economy of Canada includes strong areas like manufacturing, mining, and services. Many people work in service jobs, which include banking, healthcare, and education. Canada is also known for its natural resources, such as oil, natural gas, and minerals. The country has large oil reserves, especially in the Athabasca oil sands, and it is a top producer of agricultural products like wheat and canola.

Canada's economy has changed a lot over time. From a rural focus on farming, it has grown into an industrial and urban economy. The country has many free trade agreements, which help it trade with many nations around the world. Canada also has a strong system to support its people, with good social services and relatively fair income distribution.

History

Main articles: Economic history of Canada and Bibliography of Canadian history § Economic history

Canada has a strong and mixed economy. It is one of the largest economies in the world, ranking ninth as of 2025. This means many people in Canada have good jobs and the country produces a lot of goods and services.

Overview

Canada has a special way of running its economy that mixes private and public work. Many important rules and help for people were added after World War II in 1945. About 89% of Canada's land belongs to the government. Workers have good rules to keep them safe, and many join groups called unions. Canada also welcomes skilled workers from other countries through an online system called “Express Entry”.

Canada is known for its natural resources like gold, nickel, uranium, diamonds, and oil. Many towns, especially in northern Canada, depend on mines or timber for their jobs. These resources are mostly sold to other countries, especially the United States. The economy also includes making things like paper and machines, which are tied to logging and other natural resources. Because of its rich resources, Canada's economy changes a lot in different areas, and the government often helps to balance these changes.

Measuring productivity

Productivity helps us understand how well an economy is doing and is important for growth. The OECD publishes a yearly report that looks at productivity in many countries. It shows how productivity drives economic growth and how different parts like labor and capital help this growth.

One way to measure productivity is through multifactor productivity (MFP), which looks at how well an economy uses its resources. Canada’s MFP growth has been weak since 2002, but it has improved since 2010. To boost productivity, Canada can focus on innovation and improve how it uses its resources.

Bank of Canada

The Bank of Canada works to keep prices stable and money valuable by controlling inflation. It does this by setting targets for how much prices should go up each year, aiming for about 2 percent.

The bank shares updates about its plans eight times a year. These updates help guide how much interest people pay when they borrow money. The bank has focused on keeping inflation low and steady since the early 1990s. Even when big events, like changes in oil prices or trade issues, affect the economy, the Bank of Canada works to keep things balanced.

After events like the COVID-19 pandemic, some people have said the bank's methods may have led to higher home prices and bigger differences in wealth among people. But the main job of the Bank of Canada stays the same: to keep inflation under control.

Key industries

Canada has a strong and diverse economy. In 2024, different industries contributed to the country's overall wealth in various ways.

Real estate, rental, and leasing

Canada's real estate market is very important, making up over 13% of the country's economy in 2024. Housing played a big role, accounting for 25% of national wealth.

Service sector

The service sector is huge in Canada, employing about three-quarters of all Canadians and making up 70% of the economy. Retail is the biggest part of this sector, with many people working in stores, especially in shopping malls. Big stores like Walmart and Real Canadian Superstore are common.

Other important services include finance, real estate, and communications, mainly centered in cities like Toronto, Montreal, and Vancouver. Health care and education are also big, mostly run by the government. Canada also has a growing technology industry and a popular tourism sector, attracting millions of visitors each year.

Manufacturing

Manufacturing used to be a bigger part of Canada's economy but has declined since the 1960s. Today, it makes up about 10% of the GDP. Key areas include cars, pharmaceuticals, and steel. Canada is also a top producer of metals like uranium and graphite.

Mining

Canada is a major producer of many important metals and minerals, such as uranium and graphite.

Energy

Canada has plenty of energy sources, which help support industries like aluminum production. Hydroelectricity is a big part of Canada's power, with large dams in provinces like Quebec and British Columbia. Nuclear power and some coal and natural gas also provide electricity. The oil and gas industry, especially in Alberta, is very important but also contributes to greenhouse gas emissions.

Agriculture, fishing, livestock and forestry

Canada is a top producer and exporter of agricultural products like wheat. The agriculture sector helps the economy and supports many jobs, although it has become smaller over time compared to other industries. The government provides some support to farmers and the industry.

Infrastructure

Main article: Transportation in Canada

See also: Roads in Canada, List of Canadian railways, List of airports in Canada, and Category:Ports and harbours of Canada

Main article: Water supply and sanitation in Canada

Science and technology

Main article: Science and technology in Canada

See also: Canadian industrial research and development organizations and Artificial intelligence industry in Canada

Canada has made big steps in science and technology. The country is known for its smart work in many areas, like medicine, space, and computers. People in Canada work together in labs and companies to find new ideas and inventions that help improve life for everyone.

Foreign trade

See also: List of the largest trading partners of Canada, List of exports of Canada, and Canadian import duties

Free-trade agreements

Main article: Free-trade agreements of Canada

Canada has many agreements that make it easier to trade with other countries. These agreements help lower costs and make it simpler to buy and sell goods between nations.

Canada has active trade agreements with many places, such as Israel, Chile, Costa Rica, and several European countries. There are also agreements with Peru, Colombia, Jordan, Panama, South Korea, Ukraine, the European Union, and others. Some older agreements, like the one between Canada and the United States, have been updated or replaced with newer ones.

Canada is also working on new trade agreements with countries like India, Japan, and Singapore, as well as groups of countries in the Caribbean and Central America.

Government policies and finance

Main articles: Canadian federal budget and Taxation in Canada

See also: Fiscal imbalance in Canada

Political issues

Canada–United States trade relations

Main article: Canada–United States trade relations

Canada and the United States have a strong trading relationship. Canada's job market has done well, with low unemployment rates.

The United States is Canada's biggest trading partner. In 2005, more than $1.7 billion CAD in trade happened between the two countries each day. Most of Canada's exports and imports are with the United States. Trade with Canada is very important to the United States, making up a big part of its trade.

Trade between the two countries grew after agreements like the U.S.–Canada Free Trade Agreement and later the North American Free Trade Agreement. These agreements help make trading easier and set rules for trade. The biggest part of trade between the two countries is in energy, like oil and natural gas. The United States gets a lot of its oil from Canada, and the two countries also trade a lot of food, forest products, and electricity.

Welfare

See also: Social programs in Canada and Pensions in Canada

Labour and employment

See also: Canadian labour law and List of Canadian provinces by unemployment rate

Income and poverty

See also: Minimum wage in Canada and Poverty in Canada

Debt

Canadian government debt

Canadian government debt is the money the government owes. In 2019, the total debt was $2.434 trillion, which was about 105% of the country's total economy (GDP). Almost half of this debt was owed by the federal government.

Household debt

Household debt is the money families owe to banks and other lenders. In 2019, families in Canada owed about CAD$2.2 trillion. This is a big amount, and it is watched closely to make sure families can handle their payments.

Mergers and acquisitions

See also: List of largest companies of Canada

Since 1985, there have been many big business deals involving Canada. These deals have a total value of US$3.7 billion. Almost half of the companies bought by Canadian companies are owned by parents in the United States. Most deals where companies from other countries buy Canadian companies also come from the United States.

Here are some of the biggest deals in Canada's history:

Raw data

The following table shows the main economic indicators in 1980–2021 (with IMF staff estimates for 2022–2027). Inflation below 5% is in green.

Unemployment & Participation rate

Export trade

Export trade from Canada measured in US dollars. In 2021, Canada exported US$503.4 billion.

That dollar amount reflects a 19.5% gain since 2017 and a 29.1% increase from 2020 to 2021.

Import trade

Import trade in 2017 measured in US dollars.