Canada was ranked as the third best place to start a business in the world in 2016 according to the World Bank’s Doing Business project. It takes only one procedure and an average of five days to register a firm.

Economy of Canada

The economy of Canada is a highly developed market economy. It is the 10th largest GDP by nominal and 16th largest GDP by PPP in the world. As with other developed nations, the country’s economy is dominated by the service industry which employs about three quarters of Canadians. Canada has the third highest total estimated value of natural resources, valued at US$33.2 trillion in 2019. It has the world’s third largest proven petroleum reserves and is the fourth largest exporter of petroleum. It is also the fourth largest exporter of natural gas. Canada is considered an “energy superpower” due to its abundant natural resources and a small population of 37 million inhabitants relative to its land area.

Canada is considered an “energy superpower” due to its abundant natural resources

According to the Corruption Perceptions Index, Canada is one of the least corrupt countries in the world, and is one of the world’s top ten trading nations, with a highly globalized economy. Canada historically ranks above the U.S. and most western European nations on The Heritage Foundation’s index of economic freedom, and experiencing a relatively low level of income disparity. The country’s average household disposable income per capita is “well above” the OECD average. The Toronto Stock Exchange is the ninth-largest stock exchange in the world by market capitalization, listing over 1,500 companies with a combined market capitalization of over US$2 trillion.

International trade makes up a large part of the Canadian economy, particularly of its natural resources. In 2009, agriculture, energy, forestry and mining exports accounted for about 58% of Canada’s total exports. Machinery, equipment, automotive products and other manufactures accounted for a further 38% of exports in 2009. In 2009, exports accounted for about 30% of Canada’s GDP. The United States is by far its largest trading partner, accounting for about 73% of exports and 63% of imports as of 2009. Canada’s combined exports and imports ranked 8th among all nations in 2006.

Canada Economic Indicators

Canada GDP Growth Rate

Canada’s economy is diversified and highly developed. Foreign trade is responsible for about 45 percent of the nation’s GDP and the United States is by far the largest trade partner. On the expenditure side, household consumption is the main component of GDP and accounts for 58 percent of its total use, followed by gross fixed capital formation (22 percent) and government expenditure (19 percent). Exports of goods and services account for 32 percent of GDP while imports account for 33 percent, subtracting 1 percent of total GDP. Non-profit institutions serving households’ final consumption expenditure and investment in inventories account for the remaining 2 percent.

Canada Interest Rate

In Canada, benchmark interest rate is set by the Bank of Canada’s (BoC) Governing Council. The official interest rate is the Overnight Rate. Since 1996 the Bank Rate is set at the upper limit of an operating band for the money market overnight rate. Previously, from March 1980 until February 1996 the Bank Rate was set at 25 basis points above the weekly average tender rate for 3-month Treasury bills.

Canada Inflation Rate

In Canada, the most important categories in the CPI basket are Shelter (27.5 percent of the total weight) and Transportation (19.3 percent). Food accounts for 16.1 percent; Household Operations, Furnishings and Equipment for 11.8 percent; Recreation, Education and Reading for 11.8 percent; Clothing and Footwear for 5.7 percent; Health and Personal Care for 5 percent; Alcoholic Beverages and Tobacco Products for the remaining 3 percent. The CPI basket is reviewed every four years on the basis of household surveys. The current weights are based on spending patterns in 2009.

Canada Unemployment Rate

In Canada, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force.

Canada Government Debt to GDP

Canada recorded a government debt equivalent to 89.70 percent of the country’s Gross Domestic Product in 2018/2019 fiscal year. Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields.

Canada Balance of Trade

Between 1970 and 2008 Canada had been recording trade surpluses every year. From 2009 the trade balance shifted to deficit, with an exception of 2011 and 2014. In 2018, the largest trade deficits were recorded with China, Germany and Mexico, while the biggest trade surpluses were recorded with the US, the UK and Norway.

Canada Currency Dollar

The USDCAD spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the CAD.

Canada S&P/TSX Toronto Stock Market

The S&P/TSX is a major stock market index which tracks the performance of largest companies by market capitalization on the Toronto Stock Exchange in Canada. It is a free float market capitalization weighted index. The index covers approximately 95 percent of the Canadian equities market. The S&P/Toronto Stock Exchange Composite Index has a base value of CAD1000 as of January 1, 1975.

Canada Ease of Doing Business

Canada is ranked 23 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Canada deteriorated to 23 in 2019 from 22 in 2018. The Ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operationstronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses.

Canada Business Confidence

The Ivey PMI for Canada increased to 54.5 in October of 2020 from 54.3 in the previous month and beating market expectations of 51.5. Employment (56.1 vs 53.8 in September), inventories (45.5 vs 44.1) and supplier deliveries (44.8 vs 40.7) rose. Meantime, price pressures strengthened (63 vs 60.3).

The Ivey Purchasing Managers Index (PMI) is an economic index which measures the month to month variation in economic activity as indicated by a panel of purchasing managers from across Canada, and is prepared by the Ivey Business School at Western University. The PMI includes both the public and private sectors and is based on month end data Ivey PMI panel members indicate whether their organizations activity is higher than, the same as, or lower than the previous month across the following five categories: purchases, employment, inventories, supplier deliveries and prices.A headline value above 50 indicates an increase in purchases from the previous month and a value below 50 indicates a decrease.

Canada Consumer Confidence

Consumer Confidence in Canada decreased to 42.08 points in October from 45.35 points in September of 2020.

In Canada, the Index of Consumer Confidence is calculated from the combination of responses to 11 survey questions. Those questions, current state of the economy in the local area and in the country and its expected state 6 mths ahead; current personal financial situation and the expected situation 6 mths ahead; making a major purchase like a home or car now compared to 6 mths ago; making other household purchases now compared to 6 mths ago; confidence about own and relatives’ job security and own ability to invest in the future and save money for retirement now compared to 6 mths ago and losing job as a result of economic conditions in the last 6 months and in the coming 6 mths. Consumer confidence is measured on a scale of 0 to 100, where 0 indicates an extreme lack of confidence, 50 neutrality and 100 extreme confidence.

Canada Bank Lending Rate

Bank Lending Rate in Canada remained unchanged at 2.45 percent in October from 2.45 percent in September of 2020.

In Canada, the prime lending rate is the average rate of interest charged on loans by commercial banks to the most credit-worthy borrowers.

Canada Corruption Rank

Canada is the 12 least corrupt nation out of 180 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International. The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s rank indicates its position relative to the other countries and territories in the index.

Canada Credit Rating

Standard & Poor’s credit rating for Canada stands at AAA with stable outlook. Moody’s credit rating for Canada was last set at Aaa with stable outlook. Fitch’s credit rating for Canada was last reported at AA+ with stable outlook. DBRS’s credit rating for Canada is AAA with stable outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of Canada thus having a big impact on the country’s borrowing costs. This page includes the government debt credit rating for Canada as reported by major credit rating agencies.

Taxation in Canada

Corpo- rate tax	Perso- nal income tax	VAT or sales tax	Social Security Rate for Companies	Social Security Rate for Employees
38% (highest rate) 12% (lowest rate)	33%	5%	7,37%	6,72%

How to Start a Business in Canada

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