{ "title": "IMF Executive Board Concludes 2025 Article IV Consultation with Canada", "publication": "IMF News, January 21, 2026", "sourceUrl": "https://www.imf.org/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation", "canonical": "https://www.imf.org/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation", "overlayPath": "/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation/index.md", "summary": "The Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation for Canada.", "publishDate": "2026-01-21", "sections": [ { "heading": "Near-term outlook and adjustment to trade shock", "content": "- Canada is adjusting to a significant external trade shock amid heightened global uncertainty.\n- Higher U.S. tariffs have disrupted tightly integrated North American supply chains and weighed on exports, investment, and confidence.\n- The impact has been less severe than initially feared, reflecting USMCA exemptions, monetary easing, and targeted domestic support.\n- Economic activity is expected to remain subdued in the near term, with output below potential as trade adjustment and uncertainty continue to restrain exports and investment, compounded by slower immigration.\n- Inflation is projected to remain close to the 2 percent target, supported by softer demand and firms’ absorption of higher costs.\n- The current account deficit is expected to narrow only gradually as trade uncertainty recedes and competitiveness gains take hold." }, { "heading": "Risks to the outlook", "content": "- Risks have become more balanced but remain tilted to the downside.\n- Key downside risks identified:\n - Renewed tariff escalation or prolonged trade uncertainty could further weigh on investment and confidence.\n - Tighter global financial conditions.\n - A sharper slowdown in China.\n- Domestic vulnerability: elevated household leverage, though mitigated by strong policy frameworks and fundamentals, including a positive net international investment position and stable external financing." }, { "heading": "Financial system resilience and vulnerabilities", "content": "- The financial system remains resilient to severe solvency and liquidity shocks, consistent with FSAP findings and the 2025 Financial System Stability Assessment.\n- Pockets of vulnerability persist:\n - Commercial real estate exposures—particularly among pension funds and insurers.\n - Expanding role of nonbank financial intermediation.\n- Recommendations to bolster resilience:\n - Strengthen data collection, stress testing, and supervisory coordination.\n - Reinforce the effectiveness of AML/CFT frameworks.\n- Housing: welcome for ongoing efforts to improve housing affordability; importance of carefully calibrating demand-side measures and expanding housing supply through coordinated federal–provincial–municipal action." }, { "heading": "Fiscal policy assessment and recommendations", "content": "- Directors supported targeted, temporary fiscal support to cushion the adjustment from the trade shock.\n- Ongoing efforts encouraged to reorient spending toward public investment and strengthen the medium-term fiscal framework.\n- Welcomed measures:\n - New capital budgeting framework.\n - Comprehensive expenditure reviews.\n- Fiscal strategy guidance:\n - Gradual fiscal consolidation over the medium term.\n - Improve transparency and accountability of public investment.\n - Clarify the debt-to-GDP ratio as a formal fiscal anchor, supported by deficit and operating-balance paths as operational guides." }, { "heading": "Monetary policy assessment", "content": "- Directors generally agreed that the current monetary policy stance is appropriate.\n- Support for the central bank’s data-dependent approach to maintaining inflation at target, with flexibility to recalibrate as conditions evolve.\n- Emphasis on continued clear and effective communication to maintain confidence, bolster transparency, and support orderly adjustment." }, { "heading": "Structural reforms and medium-term priorities", "content": "- Weak productivity growth is a central medium-term challenge and key to improving economic performance and external balance.\n- Structural reform priorities:\n - Support investment, competition, and innovation.\n - Revitalize business dynamism and strengthen innovation incentives.\n - Deepen internal market integration by advancing provincial-level reforms.\n - Carefully targeted and well-governed industrial policy, with strong guardrails.\n- Climate vulnerability noted; some Directors emphasized maintaining climate-related goals.\n- Trade strategy: remain anchored in openness and predictability, seek diversification and new opportunities, and deepen continental integration, including through the 2026 USMCA review." }, { "heading": "Executive Board Assessment (summarized)", "content": "- Directors welcomed Canada’s resilience to large trade shocks and the authorities’ prudent policy response.\n- Priority: prudently manage near-term adjustment while advancing structural reforms to lift productivity, competitiveness, and resilience.\n- Called for nimble policy making and contingency planning given the uncertain external environment." }, { "heading": "Key statistics and selected indicators (as reported)", "content": "- Nominal GDP (2024): Can$ 2,934 billion (US$ 2,173 billion)\n- Quota: SDR 11,023.9 million\n- GDP per capita (2024): US$ 54,531\n- Population (2024): 41.1 million\n- Main exports: Oil and gas, autos and auto parts, gold, lumber, copper.\n\n- Real GDP growth (annual):\n - 2022: 4.7\n - 2023: 2.0\n - 2024: 1.6\n - 2025 (Proj.): 1.9\n - 2026 (Proj.): 1.7\n\n- Total domestic demand growth (annual):\n - 2022: 5.6\n - 2023: 0.3\n - 2024: 2.3\n - 2025 (Proj.): 1.5\n\n- Private consumption growth (annual):\n - 2022: 6.7\n - 2023: 2.2\n - 2024: 2.5\n - 2025 (Proj.): 1.4\n - 2026 (Proj.): 2.1\n - 2027 (Proj.): 2.4\n\n- Total investment growth (annual):\n - 2022: 5.5\n - 2023: -5.8\n - 2024: -0.1\n - 2025 (Proj.): 0.9\n\n- Output gap (percent of potential GDP) 1/:\n - 2022: 0.8\n - 2023: -0.8\n - 2024: -0.6\n - 2025 (Proj.): -0.4\n - 2026 (Proj.): -0.2\n\n- Unemployment rate (average) 2/:\n - 2022: 5.3\n - 2023: 5.4\n - 2024: 6.4\n - 2025 (Proj.): 6.8\n - 2026 (Proj.): 6.5\n - 2027 (Proj.): 6.3\n - 2028 (Proj.): 6.2\n - 2029 (Proj.): 6.1\n - 2030 (Proj.): 6.0\n - 2031 (Proj.): (not listed)\n\n- CPI inflation (average):\n - 2022: 3.9\n\n- Gross national saving (percent of GDP):\n - 2022: 24.6\n - 2023: 22.9\n - 2024: 22.7\n - 2025 (Proj.): 22.0\n - 2026 (Proj.): 22.4\n - 2027 (Proj.): 22.5\n - 2028 (Proj.): 23.0\n - 2029 (Proj.): 23.2\n - 2030 (Proj.): 23.5\n\n- Gross domestic investment (percent of GDP):\n - 2022: 25.0\n - 2023: 23.6\n - 2024: 23.1\n - 2025 (Proj.): 23.3\n - 2026 (Proj.): 23.4\n\n- General Government Fiscal Indicators (NA basis, percent of GDP):\n - Revenue:\n - 2022: 41.0\n - 2023: 41.6\n - 2024: 42.2\n - 2025 (Proj.): 42.4\n - 2026 (Proj.): 42.1\n - 2027 (Proj.): 41.9\n - 2028 (Proj.): 41.8\n - 2029 (Proj.): 41.7\n - Expenditures:\n - 2022: 40.4\n - 2023: 44.3\n - 2024: 43.7\n - 2025 (Proj.): 44.7\n - 2026 (Proj.): 44.2\n - 2027 (Proj.): 43.8\n - 2028 (Proj.): 43.5\n - 2029 (Proj.): 43.2\n - Overall balance:\n - 2022: -2.1\n - 2023: -1.3\n - 2024: -2.6\n - 2025 (Proj.): -2.3\n - 2026 (Proj.): -1.9\n - 2027 (Proj.): -1.8\n - 2028 (Proj.): -1.6\n - 2029 (Proj.): -1.4\n - Structural balance 1/:\n - 2022: -1.7\n - 2023: -1.5\n\n- Gross Debt (percent of GDP):\n - 2022: 103.5\n - 2023: 105.0\n - 2024: 110.0\n - 2025 (Proj.): 110.6\n - 2026 (Proj.): 110.9\n - 2027 (Proj.): 109.8\n - 2028 (Proj.): 108.0\n - 2029 (Proj.): 106.3\n - 2030 (Proj.): 104.3\n - 2031 (Proj.): 102.4\n\n- Net debt (percent of GDP):\n - 2022: 13.4\n - 2023: 12.8\n - 2024: 10.9\n - 2025 (Proj.): 9.7\n - 2026 (Proj.): 10.3\n - 2027 (Proj.): 11.1\n - 2028 (Proj.): 11.2\n - 2029 (Proj.): 11.0\n\n- Household Credit Growth (annual average):\n - 2022: 5.0\n - 2023: 3.6\n - 2024: 3.5\n - 2025 (Proj.): 3.4\n\n- Business Credit Growth (annual average):\n - 2022: (not listed)\n - 2023: (not listed)\n - 2024: (not listed)\n - 2025 (Proj.): (not listed)\n\n- Balance of Payments:\n - Current account balance 3/:\n - 2022: -0.5\n - 2023: -1.2\n - Merchandise Trade balance 3/:\n - 2022: 0.7\n - 2023: -1.1\n - 2024: -0.3\n - Export volume (percent change):\n - 2022: 3.0\n - 2023: 4.1\n - 2024: -3.2\n - 2025 (Proj.): 1.1\n - Import volume (percent change):\n - 2022: 1.2\n - 2023: 2.6\n - Terms of trade:\n - 2022: -5.9\n\n1/ Percent of potential GDP. 2/ Percent. 3/ Percent of GDP.\n\nIMF Executive Board Concludes 2025 Article IV Consultation with Canada — January 21, 2026.\n\n---\n\n\n References\n\n- Burkina Faso and the IMF\n- Canada and the IMF\n- Grenada and the IMF\n- Indonesia and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation/bundle-manifest.json)", "Published: January 21, 2026", "Canada is adjusting to a significant external trade shock amid heightened global uncertainty.", "Higher U.S. tariffs have disrupted tightly integrated North American supply chains and weighed on exports, investment, and confidence.", "The impact has been less severe than initially feared, reflecting USMCA exemptions, monetary easing, and targeted domestic support.", "Economic activity is expected to remain subdued in the near term, with output below potential as trade adjustment and uncertainty continue to restrain exports and investment, compounded by slower immigration.", "Inflation is projected to remain close to the 2 percent target, supported by softer demand and firms’ absorption of higher costs.", "The current account deficit is expected to narrow only gradually as trade uncertainty recedes and competitiveness gains take hold.", "Risks have become more balanced but remain tilted to the downside.", "Key downside risks identified:", "Domestic vulnerability: elevated household leverage, though mitigated by strong policy frameworks and fundamentals, including a positive net international investment position and stable external financing.", "The financial system remains resilient to severe solvency and liquidity shocks, consistent with FSAP findings and the 2025 Financial System Stability Assessment.", "Pockets of vulnerability persist:", "Recommendations to bolster resilience:", "Housing: welcome for ongoing efforts to improve housing affordability; importance of carefully calibrating demand-side measures and expanding housing supply through coordinated federal–provincial–municipal action.", "Directors supported targeted, temporary fiscal support to cushion the adjustment from the trade shock.", "Ongoing efforts encouraged to reorient spending toward public investment and strengthen the medium-term fiscal framework.", "Welcomed measures:", "Fiscal strategy guidance:", "Directors generally agreed that the current monetary policy stance is appropriate.", "Support for the central bank’s data-dependent approach to maintaining inflation at target, with flexibility to recalibrate as conditions evolve.", "Emphasis on continued clear and effective communication to maintain confidence, bolster transparency, and support orderly adjustment.", "Weak productivity growth is a central medium-term challenge and key to improving economic performance and external balance.", "Structural reform priorities:", "Climate vulnerability noted; some Directors emphasized maintaining climate-related goals.", "Trade strategy: remain anchored in openness and predictability, seek diversification and new opportunities, and deepen continental integration, including through the 2026 USMCA review.", "Directors welcomed Canada’s resilience to large trade shocks and the authorities’ prudent policy response.", "Priority: prudently manage near-term adjustment while advancing structural reforms to lift productivity, competitiveness, and resilience.", "Called for nimble policy making and contingency planning given the uncertain external environment.", "Nominal GDP (2024): Can$ 2,934 billion (US$ 2,173 billion)", "Quota: SDR 11,023.9 million", "GDP per capita (2024): US$ 54,531", "Population (2024): 41.1 million", "Main exports: Oil and gas, autos and auto parts, gold, lumber, copper.", "Real GDP growth (annual):", "Total domestic demand growth (annual):", "Private consumption growth (annual):", "Total investment growth (annual):", "Output gap (percent of potential GDP) 1/:", "Unemployment rate (average) 2/:", "CPI inflation (average):", "Gross national saving (percent of GDP):", "Gross domestic investment (percent of GDP):", "General Government Fiscal Indicators (NA basis, percent of GDP):", "Gross Debt (percent of GDP):", "Net debt (percent of GDP):", "Household Credit Growth (annual average):", "Business Credit Growth (annual average):", "Balance of Payments:", "[Burkina Faso and the IMF](http://www.imf.org/external/country/BFA/index.htm)", "[Canada and the IMF](http://www.imf.org/external/country/CAN/index.htm)", "[Grenada and the IMF](http://www.imf.org/external/country/GRD/index.htm)", "[Indonesia and the IMF](http://www.imf.org/external/country/IDN/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation/index.md", "json": "/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2026/01/21/pr-26012-canada-imf-executive-board-concludes-2025-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T04:23:19.507Z" }