Canada: commodities and USMCA

Canada is highly dependent on the production of commodities in its export basket and on the U.S.-Mexico-Canada Agreement (USMCA) as an export market.

In general, Canada is politically stable; its banking system is relatively sound and its financial market is relatively transparent. 

Sensitive to changes in commodity prices, the country is a major producer of raw materials such as forest products, metals, agricultural products and energy-related products such as oil, gas and hydroelectricity. 

Consequently, developments affecting the supply and demand for commodity resources and industrial and precious metals and materials, both domestically and internationally, can have a significant effect on the performance of the Canadian market.

The United States is Canada’s largest trading partner and developments in U.S. economic policy and market conditions have a significant impact on the Canadian economy. 

The economic and financial integration of the United States, Canada and Mexico through the T-MEC may make the Canadian economy and stock market more sensitive to North American trade patterns. 

Any disruption to the continued operation of the USMCA may have a significant and adverse impact on Canada’s economic prospects and the value of Canadian investments.


Growth has continued to slow in recent years in certain sectors of the Canadian economy, particularly energy extraction and manufacturing. 

Growth forecasts remain modest and oil prices have fluctuated widely over time, and enduring volatility in the strength of the Canadian dollar may also negatively impact Canada’s export capacity, which could limit its economic growth. 

Thus far, the global pandemic and the conflict in Ukraine continue to negatively impact the global economy, including the Canadian market.

Following an easing of these global supply-side challenges and the rapid increase in interest rates by central banks around the world, Canadian inflation has declined significantly.

Headline inflation in Canada fell from its peak of 8.1% in June 2022 to 3.8% in September 2023, while food price inflation fell from 11.4% in January 2023 to 5.8% in September 2023.


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