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Recession to hit Canadian trade next year

Canadian exports of goods are predicted to stall and imports to decline next year, as recession is expected to last into 2024, according to a QBE report on international trade.

Analyzing data collated by Control Risks and Oxford Economics, the QBE report points out the key economic and geopolitical developments that Canadian businesses who trade internationally should monitor.

Last year, Canada exported and imported $618 billion and $578 billion of goods, respectively, reaching new highs as trade rapidly recovered from the Covid-19 pandemic. This created a trade surplus of $40 billion in 2022.

However, the economy is slowing down and high interest rates are posing a challenge for businesses, increasing risks for the manufacturing sector.


Baseline forecast

Exports of Canadian goods (in real terms) are predicted to stall in 2024, while imports of goods are forecast to decline by 1.1% that year.

The Canadian economy is indeed expected to enter a recession in the second half of this year and may last into early 2024 when disruptions linked to wildfires and past interest rate hikes have their full impact of, and US growth wanes.


The US weight

In 2022, looking at international sales of goods, 76% of Canada’s export earnings came from customers in the United States, while 62% of its imports came from its southern neighbour. This is unlikely to change amid the major push to integrate North American supply chains for critical minerals and semiconductors.


Tensions with China and India

Amid accusations of Chinese interference in Canadian elections, officials have been calling for the decoupling of critical economic sectors from China. Enhanced national security scrutiny in trade may contribute to higher regulatory hurdles and potential restrictions or retaliation.

Canada sought to increase ties to India as a counterbalance to China. However, the alleged Indian government’s involvement in the killing of a Canadian citizen has led to a diplomatic spat which is unlikely to deepen trade ties between the two countries.


Canada’s largest exporting and importing sectors

The metals industry is the largest Canadian exporter, with $50.4 billion or 26% of all export earnings from the sale of goods. Meanwhile, the sector that spends most on imports is made up of manufacturers of food products, beverages, and tobacco, at $72 billion or 22% of total.



Largest exporters

Largest importers


Basic metals

Manufacturers of food products, beverages, and tobacco


Vehicle manufacturers

Basic metals


Chemical manufacturers

Vehicle manufacturers


Manufacturers of paper products

Manufacturers of petroleum and petcoke refining products


Wood manufacturers

Wood manufacturers


Advice for businesses

The QBE report shares some options that Canadian businesses may want to look at in this context.

  • Diversify sales and sourcing to other countries
  • Hedge foreign-exchange risks by buying futures, currency forwards, or options on the currency market
  • Research current and prospective trade partners: business locations, transport routes, ESG considerations, potential barriers and political instability


Ben Hunter, director of QBE Canada, commented: “The benefits of international trade will continue to outweigh the risks. This report is about giving Canadian businesses the insights they need to mitigate those risks. Insurance is just one consideration and there are other tools they can use to make the most of international trade opportunities.” 


The detailed report on international trade risks and possible mitigation is available at