GDP of Canada

The performance of the Canadian economy is heavily dependent on trade and commodity prices. In late 2007, a strong Canadian dollar and a weak US dollar caused the Canadian dollar to rise to parity with the US dollar. This caused a decline in business for Canadian manufacturers and exporters. In 2008, a flight to safety in US dollars and a decline in Canadian commodity prices slowed the rise of the Canadian dollar against the US dollar. The recession in Canada started in quarter four of 2008, almost a year after the United States. The delay was largely the result of Canada's strong banking sector, which was not weighed down by consumer debt like the United States' banking sector. Furthermore, commodity prices rose through mid-2008, supporting a significant portion of the Canadian economy. One of the fundamental differences between the Canadian recession of 2008 and 2009 and the US recession is that the US economy declined from within, while Canada was hurt by its trade relations with the United States. From the decline between 2009 and mid-2014, GDP experienced moderate growth as trade and commodity price growth returned. However, the threat of a real estate bubble, partially brought on due to high levels of investment by government stimulus during the recession, caused GDP growth to slow in 2012. The stagnant Eurozone economy also constrained Canadian export growth, which translated to slower GDP growth. Additionally, falling commodity prices led the Canadian economy into recession during the first half of 2015. However, real GDP increased 0.6% over the full year.

Wildfires in Alberta tempered growth in 2016 as crude oil output slumped, though reinvestment in damaged equipment and land, along with rising government infrastructure investment, somewhat boosted raise GDP. The Canadian economy experienced strong growth in 2017, as recovering business investment and stimulus efforts began to take hold. 2018, however, was characterized by a slowing of the economy, particularly in the residential construction market. Rising interest rates in conjunction with stricter mortgage regulations put into force in 2018 took a considerable bite out of the economy. Moreover, economic growth slowed to a near halt by the end of 2018. While some fundamentals such as the labour market remained strong, declines in both residential investment and sluggish nonresidential investment growth tempered GDP growth in 2019.

The economic landscape began to deteriorate considerably in 2020. The pandemic weighed on the country's industrial activity in Q1, disrupting global supply chains and demand as it has spread globally. To make matters worse, Saudi Arabia announced it would slash prices and increase production of oil in response to Russia refusing to lower output in response to the decline in energy demand. While OPEC+ agreed to production cuts starting in May, oil prices fell precipitously to single-digits on fears of storage running out. With job losses breaking records and curtailment of large swaths of the economy having lasted for months, GDP declined 5.0% in 2020. With a vaccine for the coronavirus having arrived at the end of 2020, the long-term effects of the outbreak are expected to be muted, particularly as there was a rapid rebound in economic activity in 2021.

Furthermore, the ongoing war in Ukraine that began in March 2022 has resulted in global sanctions against Russia, impeding global trade activity. Despite government support programs bolstering household recovery, ongoing uncertainty in 2022 stemming from the war, raising inflation and new variants of the virus is anticipated to stifle large growth in 2023. The Bank of Canada has halted rate hikes as inflation shows signs of slowing down. However, the lagged effect of the rate hikes manifests in the form of reduced consumer spending and slashed business investment. As such, GDP is estimated to increase by 1.5% and 1.2% in 2024 and 2025, respectfully.