The Economy of Canada: An Explainer

Intro to the Canadian Economy

Canada’s economy is highly developed and one of the largest in the world. In 2019, the country’s annual gross domestic product (GDP) was $1.7 trillion in current USD, according to the latest available World Bank data. That made Canada the world’s tenth-largest economy. Canada’s economy is highly dependent on international trade with exports and imports of goods and services each comprising about one third of GDP. The three largest industries, measured by their contributions to GDP, are: real estate and rental and leasing; manufacturing; and mining, quarrying, and oil and gas extraction. Canada is home to e-commerce company Shopify Inc. (SHOP.TO), major banks such as the Royal Bank of Canada (RY.TO), and energy transportation and distribution company Enbridge Inc. (ENB.TO). The CAD/USD exchange rate used in this story is 0.80638 as of June 29, 2021.

The Canadian Economy by the Numbers

• Canadian 2019 GDP: $1.7 trillion (World Ranking: #10).
• Canadian 2019 GDP per Capita: $46,189.7 (World Ranking: #28).
• Canadian 2019 GDP Growth: 1.7%.
• Canadian 2019 Consumer Price Index (CPI) Inflation: 1.9%.
• Canada’s Largest Industry by GDP (2019): 13% of GDP (real estate and rental and leasing).
• Size of Canada’s Real Estate and Rental and Leasing Industry by Dollar Value (2019; based on seasonally adjusted 2012 chained dollars): CA$252.3 billion ($203.5 billion).

The above data reflect the state of Canada’s economy prior to the global economic shock resulting from the COVID-19 pandemic.

Canada’s Top Industries: Real Estate and Rental and Leasing; Manufacturing; and Mining, Quarrying, and Oil and Gas Extraction

Canada’s three largest industries comprise nearly a third of the country’s total GDP. Those three industries and their contributions to GDP in 2019 were: real estate and rental and leasing, which accounted for CA$252.3 billion ($203.5 billion), or 13%, of GDP; manufacturing, CA$197.8 billion ($159.5 billion), or 10%, of GDP; and mining, quarrying, and oil and gas extraction, CA$156.8 billion ($126.4 billion), or 8%, of GDP. Together, they employ 2.1 million people.

Real Estate and Rental and Leasing

Canada’s real estate and rental and leasing industry is comprised of establishments engaged in the following types of activities: real estate management; selling, renting, or buying real estate for others; appraising real estate; rental and leasing of tangible assets such as automotive equipment; and leasing of non-financial intangible assets such as copyrighted works. GDP for the industry, which employs about 0.3 million people, rose 2.7% in 2019.

Some of the biggest companies in the industry are real estate investment trusts (REITs), including Canadian Apartment Properties REIT (CAR.UN), RioCan REIT (REI.UN), and Allied Properties REIT (AP.UN).

Manufacturing

Canada’s manufacturing industry is engaged in the physical or chemical transformation of materials or substances into new products. These products may either be finished goods for consumption or semi-finished goods to be used in manufacturing processes. Canada’s industries manufacture food, chemicals, petroleum, fabricated metal products, machinery, transportation equipment, and other products. GDP for the industry, which employs approximately 1.6 million people, shrank 0.2% in 2019.

Some major Canadian manufacturers include: ATS Automation Tooling Systems (ATA.TO), a custom engineer and manufacturer of industrial automated manufacturing systems; Ballard Power Systems Inc. (BLDP.TO), a manufacturer of hydrogen fuel cells; and NFI Group Inc. (NFI.TO), a manufacturer of heavy-duty transit buses.

Mining, Quarrying, and Oil and Gas Extraction

Canada’s mining, quarrying, and oil and gas extraction industry is primarily engaged in the extraction of naturally occurring minerals. The industry is dominated by oil and gas extraction, but other types of mining activity include mining coal and a range of metals, including gold, silver, copper, nickel, and more. Stone, sand, gravel, clay, and ceramic mining and quarrying are also part of the industry, as well as mining for potash. GDP for the industry, which employs approximately 0.2 million people, shrank 0.7% in 2019.

Some of Canada’s biggest mining companies include: Nutrien Ltd. (NTR.TO), a producer and distributor of potash, nitrogen, and phosphate products; Barrick Gold Corp. (ABX.TO), a gold mining company; and Teck Resources Ltd. (TECK.B.TO), a natural resource company that mines for zinc, copper, molybdenum, gold, and metallurgical coal.

Below is a closer look at Canada’s 10 biggest industries by contribution to the economy. Together, they are an important reflection of Canada’s economy because they contribute about three quarters of the nation’s GDP.

^{Source: Statistics Canada (industry GDP and employment data); industry GDP contributions based on seasonally adjusted chained 2012 Canadian dollars; conversion to U.S. dollars based on author’s calculations using CAD/USD exchange rate of 0.80638 as of June 29, 2021.}