info Visit the New & Improved Industry Insider!
You’ll find more insightful and valuable content in a fresh, new layout.
Visit Now
Canada / Coronavirus Insights
The Global Economic Outlook for 2021 - Canada

What information do you want to see from IBISWorld on COVID-19? We'd love to hear from you

by IBISWorld
Nov 06 2020

Download a PDF of the Global Economic Outlook for Canada and the United States


The COVID-19 pandemic has had a stunning impact on the global economy, and has led to a permanent shift in the operating landscape for millions of businesses. As of 4th November, over 47.4 million cases of COVID-19 have been recorded and over 1.2 million fatalities have occurred globally. At a time when the accelerating spread of COVID-19 is disrupting much of the developed world, IBISWorld has examined how this historic pandemic has permanently shifted the global economic landscape.

This report examines how the COVID-19 pandemic has influenced national economies across the globe, including analysis of GDP, unemployment, consumer sentiment, business confidence, household discretionary incomes, monetary policy and fiscal spending. It looks at the top five industries to fly and fall in each country over the next 12 months. In addition, IBISWorld has investigated the outlook for COVID-19 restrictions and what a return to normal operating conditions will look like.

While COVID-19 may subside if a vaccine is developed and distributed, the economic impacts of the pandemic will likely continue for years to come.

Follow the links below to view the other country sections of this global report:

To get more information about any industry or key economic driver in this report, contact your CRM or go to MyIBISWorld for more information.


Economic Summary


As a result of the COVID-19 (coronavirus) pandemic, the gross domestic product (GDP) of Canada is projected by IBISWorld to decline 5.6% in 2020. This decline is primarily due to a slowdown in Canadian industrial activity beginning in the first quarter of 2020 amid supply chain disruptions and a decrease in demand as the pandemic began to spread first within China, and then globally.

Moreover, record job losses and decreased revenue prospects across large sectors of the Canadian economy are projected to further compound this decline in 2020. However, GDP is projected to increase 5.1% in 2021, with a vaccine for the virus anticipated to emerge over the next year, muting the effects of the pandemic on GDP in the long run.

Thus, Canada’s GDP is projected to grow an annualized 3.2% over the five years to 2025, though uncertainties abound regarding commodity price fluctuations and global geopolitical tensions.

Unemployment rate

The spread of coronavirus across Canada occurred quickly earlier this year, prompting the adoption of social distancing methods and the mandatory closure of all nonessential businesses to contain the virus.

These containment measures have consequently weighed heavily on the economy’s service sectors, especially regarding Canada’s hospitality, tourism and airlines industries, causing the unemployment rate to rise sharply in the second quarter of 2020. Though partial reversal of this trend occurred in the third quarter as individuals began going back to work, concern over a second wave of infections and continued permanent economic damage caused by the pandemic are nonetheless projected to cause the unemployment rate to rise 69.6% in 2020; however, it is projected to decrease 17.5% in 2021 as the economy increasingly shifts toward recovery.

Accordingly, the unemployment rate in Canada is anticipated to decrease an annualized 9.7% over the five years to 2025 as the economy continues along its trajectory of recovery during the outlook period.

Consumer sentiment

In 2020, Canada’s Consumer Confidence Index (CCI) is forecast to decline 27.2% as a result of the coronavirus pandemic.

Initially, consumer confidence was weighed down in Q1 as global supply chain disruptions slowed domestic industrial activity and a dispute between oil-rich Saudi Arabia and Russia regarding global oil production levels caused significant economic uncertainty. Although the dispute over oil production has since been resolved, the second quarter of 2020 did not serve to reverse consumers’ negative perceptions of the economy. Businesses began to partially reopen, and job losses stayed high as wide-ranging restrictions of day-to-day activities continued to suppress large swaths of the economy.

As these restrictions are expected to continue and potentially even tighten amid fears of a second wave of infections, consumer confidence in Canada is projected to take a severe hit for the year. Moreover, while the CCI is projected to rise 15.8% in 2021, this is highly dependent on the creation of a vaccine and its distribution to a significant proportion of the population. However, the CCI is projected to rise an annualized 6.9% over the five years to 2025 as the economy recovers in the long run.

Business confidence

The business sentiment index represents the most accurate measure of business confidence in Canada. More specifically, a value of 0.0 indicates completely neutral business sentiment, with lower and higher values respectively corresponding to negative and positive perceptions of the business environment in Canada. In 2020, the index is projected to have a value of -2.3.

This index takes into account a variety of operating conditions for businesses, including business activity, pressures on production capacity, price trends and credit conditions. In 2020, the index is projected to decline a staggering 8,427.3% as coronavirus cases are once again on the rise in Canada, thus reflecting widespread negative business confidence as the resumption of normal business operations may be delayed further.

While the index is also projected to decline 158.7% in 2021, since the recovery of business sentiment in Canada hinges on the as-yet uncertain development and release of a vaccine, it is not projected to decline as much compared with 2020 figures. Business sentiment is projected to decline an annualized 177.9% over the five years to 2025, due largely to performance in 2020.

Overnight rate

The overnight rate ultimately represents the main indicator of monetary policy in Canada, as the overnight rate is the rate at which major financial institutions are able to borrow and lend short-term funds to each other. Moreover, it is directly tied to what the Bank of Canada sets as its interest rate target.

The Bank of Canada announced that it was cutting interest rates in March to near-zero to make borrowing money cheaper and support the economy. By cutting interest rates, the Bank of Canada hoped to incentivize borrowing, and therefore, increase the flow of money in the economy during a period of economic decline caused by the coronavirus pandemic.

For the remainder of 2020, the overnight rate will likely average 0.54%, though it is important to note that the annual average is skewed upward due to the two pre-pandemic months in early 2020. Additionally, the annual overnight rate average is anticipated to decline 0.25% in 2021, which is the overnight rate target.

Over the next five years, the overnight rate is projected to remain unchanged until 2024, reflecting expectations of a long road back to full employment.

Real household discretionary income

In Canada, per capita disposable income measures real household discretionary income for Canadian individuals and families, representing the ability to purchase goods and services after paying taxes and medical insurance premiums to the government.

While disposable income often decreases during periods of economic duress, disposable income is expected to increase 7.4% in 2020 due to government transfer payments giving the poorest individuals in Canada increased amounts of funds. Further, a generally large stimulus and enhanced unemployment benefits, along with other components of Canada’s federal Economic Response Plan to the pandemic, have enabled disposable income to rise in 2020 despite bleaker economic operating conditions.

In 2021, as the economy shifts toward recovery, some of these benefits are likely to be scaled back or discontinued, resulting in disposable income declining 4.7% that same year. However, per capita disposable income in Canada is expected to decrease an annualized 0.5% over the five years to 2025 despite the anticipated economic recovery, skewed in part by the forecast decline in 2021.

Government stimulus support

By enacting federal legislation, Canada’s COVID-19 Economic Response Plan, first formulated in March, seeks to support both individuals and businesses that have been affected negatively by the spread of the virus. Namely, the government has instituted a wide range of relief programs, targeted toward different sections of the population, so as to adequately support varying categories of the workforce and the national population as a whole depending on how they have been affected.

For instance, the Canada Emergency Response Benefit (CERB), which has now ended, represented one of these programs. The CERB gave financial support in the form of a $2,000 taxable benefit every four weeks to self-employed and employed Canadians who stopped working or had their work hours reduced due to the pandemic. Individuals were able to reapply until the end of the program. 

The Canada Emergency Wage Subsidy (CEWS), ongoing at of the time of writing, grants affected employers in Canada a subsidy of up to 75.0% of employee wages for up to 24 weeks. This subsidy is meant to enable business owners to rehire workers that were previously laid off due to the coronavirus pandemic. Similarly, the Canada Emergency Business Account (CEBA), which is available through October 2020, provides interest-free loans of up to $40,000 for small businesses and nonprofit institutions to cover operating costs. The program as a whole is worth $25.0 billion, with all loans being federally guaranteed.

Moreover, Export Development Canada’s Business Credit Availability Program is expected to run through June 2021, and is working with financial institutions to guarantee 80.0% of new operating credit and cash flow term loans of up to $6.3 million to small- and medium-sized enterprises, also referred to as SMEs. The program’s terms are available to exporting and non-exporting companies, with the program itself being available at various banks and credit unions across Canada.

These programs span multiple categories of government support and are just some of many programs instituted by the government as a part of its Economic Response Plan, with the federal government broadly organizing its various programs on the basis of whether they provide support for individuals, families, seniors, businesses or entire sectors of the economy.

Lastly, some programs are forthcoming, and thus, are still in the process of being developed. For example, there are plans to announce more information concerning the Canada Emergency Rent Subsidy (CERS), which was announced via press release in early October. The CERS is meant to provide additional support to businesses by providing simple and easily accessible rent and mortgage support until June 2021 for qualifying organizations.

Growth Industries

72111CA Hotels & Motels in Canada

Revenue for the Hotels and Motels industry in Canada is forecast to rise 32.3% in 2021. Similarly, employment is projected to rise 21.5% the same year, and industry profit, defined as earnings before interest and taxes, is anticipated to over the five years to 2025, accounting for 12.0% of revenue in 2021, up from 7.3% in 2020.

This growth is due in large part to the forecast recovery of the Canadian economy in 2021 and during the outlook period as a whole, which is contingent upon the release of a vaccine for the virus. Currently, the vaccine is anticipated to be released in 2021, and will likely result in a resurgence of domestic and international travel.

To this end, inbound international travel to Canada is forecast to rise 340.8% in 2021, consequently providing a strong revenue base for industry operators since the recovery of the travel industry is implicitly linked to the hospitality and accommodations sector.

21111CA Oil Drilling & Gas Extraction in Canada

The Oil Drilling and Gas Extraction industry in Canada, which operates and develops oil and gas field properties and produces crude petroleum, among other activities, is expected to post strong growth in 2021, with total industry revenue forecast to grow 22.1%. Moreover, industry employment is projected to increase 13.7% in 2021, and industry profitability, defined as earnings before interest and taxes, is forecast to rise from an expected loss of 9.5% in 2020 to an expected loss of only 0.1% in 2021.

As the economy recovers following the coronavirus pandemic, oil and gas prices are projected to improve, and the domestic production of both resources will likely rise as well, especially considering that Canada’s oil and gas resources are the third-largest in the world. As the industry returns to growth during the outlook period, oil and gas extraction companies are forecast to increase their respective workforces so as to take full advantage of a vastly improved operating environment, further underscoring the anticipated rise in industry employment in 2021.

48819CA Aircraft Maintenance, Repair & Overhaul in Canada

The Aircraft Maintenance, Repair and Overhaul industry in Canada services, repairs, overhauls and maintains aircraft, in addition to providing ancillary support services such as inspections and testing. Industry revenue is forecast to increase 16.5% in 2021, and employment is also anticipated to rise, increasing 11.8% that same year.

Additionally, industry profit, defined as earnings before interest and taxes, is forecast to comprise 10.0% of industry revenue in 2021, up from 9.7% in 2020. Although profit was not seriously affected in 2020 due to the coronavirus pandemic compared with other industries, industry operators have nevertheless suffered a marked revenue decline, as the broader travel industry has constituted one of the hardest hit industries.

However, a highly anticipated vaccine for the coronavirus is expected to be made publicly available in 2021; this bodes well for the Aircraft Maintenance, Repair and Overhaul industry, which must ensure that aircraft remain in the proper condition amid a likely resurgence in domestic and international travel activity.

44229CA Home Furnishings Stores in Canada

The Home Furnishings Stores industry in Canada retails a wide range of home furnishing goods, which have been purchased from domestic and international manufacturers and wholesalers and then sold to downstream consumers. Though revenue is forecast to decline 12.5% in 2020 as a result of the pandemic, industry revenue is likely to recover in 2021 amid the broader recovery of the economy, since consumers will likely spend more of their disposable incomes amid a more positive economic climate.

Additionally, many of the social distancing measures that are in place in Canada at the time of writing are expected to be increasingly relaxed in the long run as the virus abates. Accordingly, revenue is forecast to rise 15.4% in 2021, and employment is forecast to increase 10.5% that same year as business operations resume and operators bring back their staff.

However, this resurgence in business activity for operators will likely not have immediate effects on industry profit. In 2021, industry profit, defined as earnings before interest and taxes, is forecast to increase marginally, from accounting for 4.5% of revenue in 2020 to 4.9% in 2021.

48311CA Ocean & Coastal Transportation in Canada

Operators in the Ocean and Coastal Transportation industry in Canada are primarily engaged in transporting freight and passengers using deep sea, coastal and Great Lakes water transportation, including ocean-going cruise ships.

In 2021, industry revenue is forecast to increase 15.1%, and total industry employment is anticipated to rise 8.9% that same year as the pandemic is likely to subside from 2021 onward, enabling the recovery of the Canadian economy and simultaneously facilitating the lifting of many of the restrictive measures in place to prevent the virus’s spread at present. Consequently, individuals are expected to be increasingly likely to participate in travel-related activities, especially upon the release of a coronavirus vaccine.

In addition, the pandemic has caused widespread disruption with respect to global supply chains, especially in the first quarter of 2020, thereby interrupting the flow of ocean and coastal transport on a global scale and within Canada itself, which is expected to further subside in the near future. Nonetheless, profit is projected to recover more slowly, as it is projected to rise only 5.0% over the next year.

Decline Industries

51711cCA Wired Telecommunications Carriers in Canada

The Wired Telecommunications Carriers industry in Canada provides local and long-distance telephone services to its downstream consumers, though industry operators also generate an additional stream of revenue by wholesaling access to their networks.

Although total industry revenue is projected to decline 18.1% in 2021, denoting this industry as one of the top five declining industries over the next year, it is important to note that this industry has long been on the decline in an increasingly technologically advanced world. This forecast revenue decline is anticipated to be further compounded by a concurrent decrease in employment, which is expected to fall 14.7% in 2021.

Profit, however, is projected to remain fairly stable compared with 2020 figures; however, industry profit will likely increase, albeit slightly, in the long run along with the general improvement in country-wide operating conditions. Despite the industry’s long-running decline, these benefits are not likely to be observed on a more immediate basis.

52239CA Loan Administration, Cheque Cashing & Other Services in Canada

The Loan Administration, Cheque Cashing and Other Services industry in Canada services loans, primarily mortgages. Servicing loans includes performing the administrative aspects of the loan, though industry operators do not originate the loans themselves. Furthermore, the industry performs money transmission services, including the selling and cashing of traveller’s cheques, money orders and cashier’s checks, while also renting safe deposit boxes.

In 2021, industry revenue is expected to decline as the economy recovers, due to aggregate household debt levels increasing at a slower rate and a falling unemployment rate in Canada. As the economy begins to recover following the coronavirus pandemic, individuals will likely begin returning to work in greater numbers and consumers are anticipated to become increasingly confident regarding future macroeconomic trends, decreasing the likelihood that consumers will need to take out high-interest loans.

This is expected to result in revenue declining 8.4% in 2021 and employment falling 5.5% that same year. Further underscoring this decline is industry profit, defined as earnings before interest and taxes, which is additionally anticipated to account for 9.9% of revenue in 2021, down from 10.1% in 2020 amid decreased revenue and employment prospects.

44511CA Supermarkets & Grocery Stores in Canada

The Supermarkets and Grocery Stores industry in Canada is the largest food retail channel in Canada, retailing general lines of food products such as fresh and prepared meats, poultry and seafood, canned and frozen foods, fresh fruits and vegetables and various dairy products.

As a result of the coronavirus pandemic, operators in this industry have experienced a temporary spike in revenue in 2020. This is because individuals and families have stopped eating out and started stocking up at grocery stores amid the adoption of social distancing methods and the issuance of shelter-in-place orders to slow the spread of the virus.

In 2021, however, revenue is projected to decline 7.1% and employment will likely fall 1.8% as consumers begin dining out again as restrictions are eased and the pandemic subsides. This is only projected to be a short-term trend, however, as revenue is projected to rise in the long run as the economy continues to recover over the five years to 2025.

In 2021, profit, defined as earnings before interest and taxes, is expected to decrease only marginally, accounting for 1.7% of revenue in 2021, down from 4.3% in 2020.

31142CA Canned Fruit & Vegetable Processing in Canada

The Canned Fruit and Vegetable Processing industry in Canada purchases fruits and vegetables and processes them with other ingredients to create canned fruit and vegetables, nonfrozen juices and drinks, canned soups, jams, baby food, sauces and dehydrated fruits and vegetables. The industry’s products are ultimately sold to consumers at various retail channels, such as the Supermarkets and Grocery Stores industry in Canada (IBISWorld report 44511CA).

As more individuals and families resume dining out in 2021 upon the release of a vaccine and the general recovery of the Canadian economy, revenue for the Canned Fruit and Vegetable Processing industry is anticipated to decline 3.6% in 2021, with employment expected to decline 2.4%. Additionally, profit, defined as earnings before interest and taxes, projected to also decline, accounting for 7.9% of industry revenue in 2021, down from 8.1% in 2020.

The industry’s decline in 2021 is also projected to be underscored in some part by health concerns regarding some industry products, as downstream consumers are increasingly choosing alternative goods, such as frozen foods, as well as fresh fruits and vegetables.

33451bCA Medical Device Manufacturing in Canada

The Medical Device Manufacturing industry in Canada primarily constitutes manufacturers of electromedical and electrotherapeutic apparatuses, such as magnetic resonance imaging equipment (MRIs), medical ultra-sound equipment, pacemakers, hearing aids, electrocardiographs and endoscopic equipment, among other product offerings.

Although industry revenue is projected to increase 2.2% in 2020 as a result of increased demand stemming from the healthcare sector, the anticipated easing of the pandemic over the next five years will likely cause revenue to decline over the next year; thus, industry revenue is projected to fall 0.7% in 2021, with employment forecast to rise 0.2% that same year. Profit, however, is projected to rise in 2021; in 2021, industry profit, defined as earnings before interest and taxes, is forecast to rise, accounting for 9.6% of revenue, down from 6.2% of revenue in 2020.

Although greater demand has enabled operators to increase revenue in 2020, supply chain disruptions and manufacturing slowdowns across the manufacturing sector have nevertheless cut into profit, which is projected to recover in 2021 along with the general recovery of the Canadian manufacturing sector.

Outlook for COVID-19 Restrictions

Although the Canadian economy is projected to recover in the long run, which will likely begin in 2021 and continue over the five years to 2025, the resumption of specific kinds of economic activity, including international travel and domestic travel, remains highly dependent on the public health nature of the crisis.

Therefore, international travel, which includes Canadians travelling abroad as well as inbound international travellers, and domestic travel are forecast to strongly rise in 2021, and is largely dependent on the release of a successful vaccine. It is also dependent on the ensuing vaccination of large swaths of the Canadian and global populations to safely enable the global flow of individuals.

If a vaccine is delayed, individuals and families within Canada, as well as globally, will likely continue to stick to social distancing and shelter-in-place activities until a vaccine is released. This same logic also applies to large public gatherings within Canada, such as spectator sports and concerts, since they involve large numbers of individuals inhabiting a shared space concurrently.