Canada’s economy continues to grow, supported by a still favorable labor market, rising asset prices and falling inflation, according to a new AM Best report.

However, population growth has started to outpace job creation, resulting in wage growth slowing and the unemployment rate increasing. Housing affordability also remains a concern, given the significant increase in home prices, according to a recently issued Best’s Special Report on Canada’s economy.

In 2023, Canada’s economic growth slowed significantly, to 1.1%, from an annual rate of 3.8% in 2022, as the cumulative effects of higher interest rates, natural disasters, and a slowdown in global economic activity subdued growth for most of the year. Investment, consumption, and housing activity increased in the first quarter of 2024, prompting a growth rate of 1.7%, which was followed by a 2.1% growth rate in the second quarter. “However, the primary driver of growth was government spending, as consumer spending softened,” said Ann Modica, director, AM Best.

Immigration has also played a role in Canada’s economy. Immigration has surged since the pandemic, with a net increase of more than one million temporary residents. Population growth in 2023 has been estimated at around 3%, a multi-decade high. However, population growth is expected to return to more historical rates over the near term, to 1.0% in 2025 and 2026, as the government has plans to reduce the number of worker visas and cap the number of international student permits.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=347965.

AM Best will host an insurance market briefing on the state of Canada’s insurance industry in Toronto on Friday, Oct. 25, 2024. During the half-day event, AM Best analysts will deliver market insights and present overviews of Canada’s main insurance sectors. For more information, please visit the event website.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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