Taking Stock for Friday, Jan. 30, 2026

Key Concepts

• Gross Domestic Product (GDP): The total value of goods and services produced within Canada’s borders. Currently at $2.2 trillion USD.
• Per Capita GDP: GDP divided by the population, currently $54,283 USD per person in Canada.
• Productivity: Efficiency of economic output; a key area of concern for Canada’s long-term economic health.
• Decoupling (Consumer Confidence & Spending): The observed divergence between negative consumer sentiment and continued consumer spending.
• Buy Canadian: Government initiatives to encourage domestic procurement and support Canadian businesses.
• Industry 4.0: The integration of advanced technologies (AI, machine learning, robotics) into manufacturing processes.
• Supply-Side Economics: Focusing on policies that stimulate production and investment, rather than solely on demand.
• Trade Diversification: Reducing reliance on a single trading partner (currently the US) and expanding trade relationships with other countries.

Canada’s Economic Landscape & Future Outlook

Economic Overview (2024/2025)

As of the end of 2024, Canada’s Gross Domestic Product (GDP) stood at $2.2 trillion USD, with a slight growth expected in 2025. On a per capita basis, this translates to $54,283 USD per person. Canada currently ranks as the 10th largest economy globally. The largest sectors contributing to GDP are: real estate (over $300 billion), manufacturing ($200 billion), healthcare, finance, and public administration. Manufacturing represents 68% of Canada’s merchandise exports, valued at $354 billion annually. While exports account for approximately 30% of the Canadian economy, the domestic economy constitutes the remaining 70%. The service sector is the largest employer, providing 14.7 million of Canada’s 18 million jobs, with 70% of its activity being domestic. Notably, up to 11% of Canada’s economic activity occurs outside of officially reported sectors.

The Importance of Domestic Growth

Andrew DiCapua (Canadian Chamber of Commerce) emphasized the critical importance of focusing on strengthening the domestic economy alongside trade relationships. He noted the current “noise” – geopolitical risks, threats to central bank independence, and international diplomatic efforts – should not overshadow the need for investment within Canada to drive growth, increase wages, and move beyond “survival mode” to a state of “thriving.” He stated, “We need to start thriving, move from surviving to thriving. And that requires investment. That requires focus.”

Consumer Confidence & Spending

Despite subdued consumer confidence, consumer spending has remained surprisingly resilient, increasing by approximately 4% year-over-year, even on a per capita basis. This “decoupling” of confidence and spending is a concerning trend, suggesting underlying economic activity isn’t fully reflected in consumer sentiment. Affordability remains a significant concern for Canadian households. While CPI is growing on target, addressing affordability remains a key challenge.

The “Buy Canadian” Initiative

The “Buy Canadian” push is gaining traction, with evidence of increased purchases of Canadian goods and services, even within the manufacturing sector (e.g., snowplow manufacturers using Canadian steel, ice cream makers sourcing Canadian ingredients). However, a recent survey indicated that only about 50% of businesses are actively taking action as a result of this initiative, raising concerns about the pace of adoption and diversification.

Manufacturing & Innovation

Revitalizing Canadian Manufacturing

Dennis Darby (Canadian Manufacturers & Exporters Association) highlighted a potential “golden era” for manufacturing, with a renewed focus on domestic production and reducing reliance on offshoring. However, he cautioned that 80% of Canadian manufactured goods are still exported to the US, and this integration is likely to continue. Government initiatives like “Buy Canada” and “Buy Ontario” could offset potential losses from US exports, particularly in sectors like defense, construction, and infrastructure. He noted that current discussions lack “meat on the bones” in terms of concrete implementation.

Advanced Manufacturing & Industry 4.0

Darby emphasized the increasing importance of “Industry 4.0” – the integration of technologies like AI, machine learning, and robotics – in addressing labor shortages and boosting productivity. He stated that manufacturers are increasingly investing in these technologies despite economic uncertainty. This shift will lead to a demand for more highly skilled workers and increased output.

The Future of Manufacturing Jobs

While acknowledging the potential for automation to reduce the number of manufacturing jobs, Darby argued that embracing Industry 4.0 is crucial for maintaining competitiveness and creating higher-skilled, higher-paying positions.

Trade Diversification & Economic Independence

Beyond the US Market

Stuart Bergman (EDC) stressed the need for Canada to diversify its export markets beyond the US. He explained that the ease of diversification varies significantly by industry, with services and raw materials being easier to redirect than goods heavily integrated into North American supply chains. He noted that larger companies are better equipped to navigate the complexities of new markets.

Strategic Diversification

Bergman suggested prioritizing diversification into markets where it is easiest to achieve, such as Europe for raw materials and Asia-Pacific for energy exports. He also highlighted the potential of digitally enabled services as a relatively low-hanging fruit for trade diversification.

Infrastructure & Capacity

He pointed to investments in energy infrastructure (e.g., TMX expansion, West Coast port upgrades) as positive steps towards facilitating increased trade with Asia-Pacific.

Productivity & Economic Efficiency

Addressing Canada’s Productivity Problem

Charles Sandono (Service Credit Union) identified Canada’s long-standing productivity problem as a key obstacle to wealth creation. He argued that insufficient investment in productive means (machinery, equipment, R&D) is a major contributing factor. He emphasized a need for a cultural shift towards prioritizing supply-side economics and investment.

Government Role & Confidence Building

Sandono acknowledged that recent government budgets and announcements represent a step in the right direction, signaling a greater focus on supporting the supply side of the economy. However, he cautioned that restoring business confidence is crucial for stimulating investment.

Capital Allocation & Housing

Sandono highlighted the issue of household borrowing for consumption (particularly housing) crowding out investment in the business sector. He suggested that addressing the housing market could free up capital for more productive investments. He stated, “we also need to think about how can we actually divert more of our capital more of our savings toward in towards investment.”

Conclusion: A Call to Action

Amanda Lang concluded that Canada possesses significant advantages – natural resources, proximity to the US, a strong social safety net, and a diverse population. However, she argued that complacency and a reliance on these advantages may have hindered progress. The current global landscape demands a shift towards greater economic independence, innovation, and efficiency. Canada has the resources and capabilities to meet these challenges and shape its own economic future, but it requires a concerted effort to address long-standing issues and embrace new opportunities. The outcome, she asserted, is ultimately in Canada’s hands.