Business Environment Profiles - Canada
Published: 27 January 2025
Corporate profit
404 $ billion
6.5 %
This driver refers to the corporate profit earned across all industries in Canada. Profit is measured as the net operating surplus of corporations. Data is sourced from Statistics Canada and presented in chained 2017 dollars.
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The 2009 recession led to a 33.4% plunge in corporate profit, as both business and consumer clients cut back spending dramatically. Profit recovered quickly in 2010 and 2011, passing the 2008 high, due to strong export activity and growing consumer spending. Profit then contracted and growth slowed as unemployment remained high and Canada's European trading partners continued to struggle economically. Economic growth was moderate over 2014, but real GDP contracted during the first two quarters of 2015, leading to low real GDP growth of 0.7% over the year. A decline in commodity prices also hurt Canada's businesses as commodity-based industries such as oil and gas exploration, extraction and mining suffered substantial losses due to declining prices and weak export demand. Consequently, corporate profit fell 23.2% in 2015.
In 2016, corporate profit began to rebound and grew 6.2% with an additional rapid increase in 2017 of 19.3%. The majority of corporate profit growth during the period has come from nonfinancial companies, as consumer spending and overall US economic growth have improved company fundamentals. At the same time, financial corporations have seen volatile profit figures during the same period. In 2019, corporate profit contracted due to worse profit performance from financial corporations, a slowdown in exports markets and lower oil prices.
In 2020, a severe shock to the global economy from the COVID-19 outbreak strained Canadian companies. From supply chain disruptions to reduced demand for many goods and services, many forces have weighed on corporate profit, particularly in the energy sector. Weaker economic prospects in the United States also inhibited Canadian companies, as they continue to serve as suppliers of their US counterparts. With the deep impact of the coronavirus outbreak on the Canadian economy, corporate profits declined significantly, though much less than initially expected at the onset of lockdown measures in 2Q20. Corporate profits bottomed out in 3Q20, declining 23.4% compared with the same period in 2019. Nonetheless, corporate profits rallied in 4Q20 and through 1H21, with 2Q21 figures 28.8% higher than the same quarter in 2019. Despite volatility in 2020, corporate profits increased just 0.9% over the year, followed by growth of 40.1% in 2021, driven by a rebounding economy amid vaccination uptake. Corporate profits benefited from business reopening coupled with fiscal stimulus, which drove consumer spending. Nevertheless, corporate profits experienced significant variance between sectors.
In 2022, corporate profit rose 17.9% continuing the significant increase of 2021. While a majority of 2022 was met with record corporate profit, elevated interest rates and falling consumer spending caused a dramatic reduction in corporate profit in Q4 2022. Economic uncertainty, rising inflation, and the conflict in Ukraine caused businesses to pull back. At the same time consumer spending is anticipated to drop significantly as inflation negatively impacts disposable income. This was realized with a 14.8% reduction in corporate profit in 2023. While a recession was avoided moving into 2024, uncertainty around inflation remained, leading to a decrease of 5.6% during the year. However, as rates have been cut by the Bank of Canada, corporate profit is expected to increase 3.3% in 2025.
Corporate profit is expected to grow but be somewhat constrained in the near term. A structurally...
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