Growing Canada’s exports to overseas markets by 50% – 2024 update
Key highlights
- In 2018, the Government of Canada set a target to increase overseas (non-U.S.) exports by 50% by 2025. This implied reaching $292 billion in exports to these markets. As of 2024, overseas exports reached $296 billion, surpassing the target a year early.
- At the product level, it was mostly services and raw materials that led the way in reaching the target. Exports of travel services, commercial services, energy products, metal and non-metallic mineral products, and metal ores and non-metallic minerals to overseas markets exceeded the 50% expansion goal.
- Geographically, growth was driven by the European Union (various goods and services), United Kingdom (mainly gold), and India (education related travel services).
- Some of these drivers—particularly gold exports and international student expenditures—may not reflect sustainable or broad-based trade growth. However, when these are excluded, Canada is only slightly behind in reaching its 2025 target and given another year of growth, other products may yet see additional growth in exports.
Introduction
The 2018 Fall Economic Statement introduced a strategic objective to diversify Canada’s trade by increasing exports to overseas (i.e. non-U.S.) markets by 50% by 2025 (Government of Canada, 2018). This objective aimed to reduce reliance on the U.S. market and enhance Canada’s economic resilience and growth by tapping into global markets (Global Affairs Canada, 2019).
In 2017, the last full year of data available when the target was set, Canada exported $195 billion of goods and services to overseas markets. A 50% increase meant that Canadian exports to overseas markets would have to achieve a 5.2% average annual growth rate and reach $292 billion by 2025 (a growth of $97 billion from 2017). Despite the challenges of the pandemic, a changing geo-political landscape, and supply chain shortages, Canadian exports to overseas markets showed resilience and reached $296 billion in 2024, surpassing the diversification target one year ahead of schedule (see figure 1).
This report looks back over the 2017 to 2024 period to identify the main sources of growth in Canada’s overseas exports, both by geographic area and product/service type. We identify areas of achievement and others that may lack sustainability going forward.
Figure 1: Canada's overseas goods and services exports
Text version - Figure 1
| Year | Canada's overseas goods and services exports ($ million) | Overseas export target in 2025 ($ million) |
|---|---|---|
| Data: Statistics Canada Table 36-10-0014-01 Source: Office of the Chief Economist – Global Affairs Canada. | ||
| 2017 | 194,507 | 291,761 |
| 2018 | 214,279 | 291,761 |
| 2019 | 220,966 | 291,761 |
| 2020 | 206,960 | 291,761 |
| 2021 | 226,418 | 291,761 |
| 2022 | 272,859 | 291,761 |
| 2023 | 278,419 | 291,761 |
| 2024 | 295,698 | 291,761 |
| 2025 | 291,761 | |
Key drivers of export growth by product category
Since 2017, Canadian exports to overseas markets have grown by 52%, beating the required growth rate of 50%. This has been supported mainly by services exports, which have grown 97% since 2017. Meanwhile the growth in goods exports has been more subdued at 34% since 2017.
Overseas exports of travel and commercial services in particular grew at a fast rate. Commercial services exports, many of which could be delivered digitally, did not suffer during the pandemic and have grown 79% since 2017. At the time of writing, detailed breakdown by country and by categories of commercial services for 2024 were not available, but 2023 data show strong growth since 2017 in computer and information services, research and development, and charges for the use of intellectual property. On the other hand, travel services exports declined substantially during the pandemic but have since rebounded strongly, resulting in a growth of 153% from 2017. This was supported by the rise of international students in Canada, which has more than doubled since 2017; living expenses and tuition by international students are included in the “travel services” categoryFootnote 1.
Figure 2: Canadian overseas exports growth (%, 2017 – 2024), by product categories
Text version - Figure 2
| Product categories | 2017 – 2024 growth rate (%) | Required growth rate (%) |
|---|---|---|
| Data: Statistics Canada Table 36-10-0014-01 Source: Office of the Chief Economist – Global Affairs Canada. | ||
| Total | 52.2% | 50% |
| Goods | 34.4% | 50% |
| Services | 97.1% | 50% |
| Travel | 153.1% | 50% |
| Transportation | 32.7% | 50% |
| Commercial | 78.8% | 50% |
While goods exports on a balance of payments basis do not allow us to disaggregate by product type and geographical destination at the same time, merchandise trade reported on a customs basis provides the level of detail. This report thus mixes the two types of data for its analysis. Despite the overall underperformance of overseas merchandise exports, some product categories exceeded the 50% growth rate, including energy products, metal and non-metallic mineral products, and metal ores and non-metallic minerals.
Energy product exports to overseas markets grew the fastest, at 130% since 2017. Growth was supported by high energy prices in recent years and the Trans Mountain pipeline expansion, which opened overseas opportunities for Canadian crude oil producers in western Canada starting in 2024.
The second fastest expansion was in metal and non-metallic mineral products, which grew 74% since 2017, supported by the strength of gold exports. In third place were metal ores and non-metallic minerals which grew 50% from 2017, supported by spikes in prices of metal and mineral products.
While it did not grow over 50% between 2017 and 2024, motor vehicles and parts exports are on track to reach the 50% target by 2025 as it has been growing 5.4% per year since 2017, exceeding the 5.2% per year target growth rate. However, the value of motor vehicles and parts exports to overseas markets is still relatively small, at 2.7% of total overseas merchandise exports. Within motor vehicles and parts, passenger cars and light trucks grew 112% from 2017 to reach $2.5 billion in 2024. Other successes were found in agriculture related products such as wheat, which grew 64% from 2017 to reach $9.4 billion, and potash, which grew also 64% from 2017.
While commodities, agricultural products, and motor vehicles accounted for the largest increases, there were other overseas successes worth noting. While much smaller in value, exports of the following products also grew faster overseas than the target pace: boats and other transport equipment, cleaning products and toiletries, and clothing and accessories.
Figure 3: Canadian overseas exports growth (%, 2017 – 2024), by merchandise categories
Text version - Figure 3
| Merchandise categories | 2017 – 2024 growth rate (%) | Required growth rate (%) |
|---|---|---|
| Data: Statistics Canada Table 12-10-0173-01 Source: Office of the Chief Economist – Global Affairs Canada. | ||
| Forestry products & building & packaging materials | -25.8% | 50% |
| Industrial machinery, equipment & parts | 11.4% | 50% |
| Basic & industrial chemical, plastic & rubber products | 15.6% | 50% |
| Aircraft & other transportation equipment & parts | 20.0% | 50% |
| Farm, fishing & intermediate food products | 23.2% | 50% |
| Electronic & electrical equipment & parts | 24.9% | 50% |
| Consumer goods | 29.6% | 50% |
| Total all products | 40.1% | 50% |
| Motor vehicles & parts | 44.3% | 50% |
| Metal ores & non-metallic minerals | 50.2% | 50% |
| Metal & non-metallic mineral products | 74.2% | 50% |
| Energy products | 130.4% | 50% |
Key drivers of export growth by geography
Geographically, the regions that were the main drivers of Canada meeting its diversification early came from the European Union (EU), the United Kingdom (UK) and India—Canada’s largest, second largest and fourth largest overseas export markets (with China being the third). Together, these 3 regions accounted for 50% of Canada’s overseas export growth over the period.
Figure 4: Share (%) of the growth in Canadian overseas exports between 2017 and 2024
Text version - Figure 4
| Export destination | Product | Share (%) of the growth in Canadian overseas exports between 2017 and 2024 |
|---|---|---|
| Data: Statistics Canada Tables 36-10-0023-01 and 12-10-0157-01 Source: Office of the Chief Economist, Global Affairs Canada. | ||
| European Union | Goods | 9.5% |
| European Union | Services | 10.9% |
| United Kingdom | Goods | 10.6% |
| United Kingdom | Services | 4.1% |
| India | Goods | 0.9% |
| India | Services | 13.7% |
| Rest of overseas | Goods | 26.3% |
| Rest of overseas | Services | 24.0% |
Growth in exports to the European Union between 2017 and 2024 (54%) was relatively evenly distributed between goods and services. Goods to the EU accounted for 9% of Canada’s overseas exports growth overall while services to the EU accounted for 11% of growth. Commercial services exports to the EU played a major role, growing by $7.3 billion (or 101%) which alone is 7.2% of total overseas exports growth. The EU is Canada’s largest overseas export market and trade relations have been supported by the introduction of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU in 2017 which lowered tariffs and other trade barriers.
Meanwhile, growth in exports to the United Kingdom was concentrated in goods, accounting for 11% of total growth to overseas markets. While services exports to the United Kingdom also grew more than 50% between 2017 and 2024, the relatively small initial value of exports means that the growth in services exports to the UK only contributed 4.1% to total overseas export growth. Upon closer examination of customs-based merchandise data, almost all merchandise export growth to the United Kingdom (93%) was in gold. Gold is a commodity with volatile prices that can increase in demand due to its usage as a financial instrument. Therefore, the growth in gold exports may not accurately reflect the relative strength of bilateral trade relations.
For India, 94% of export growth between 2017 and 2024 was driven by services, which accounted for 14% of overall export growth to overseas markets. While detailed services data for 2024 was not yet available at the time of writing, growth in services exports to India over 2017 to 2023 was 98% driven by travel services, which include spending by international students in Canada. The number of international students from India studying in Canada increased 246% between 2017 and 2023. With the introduction of the cap in international students in the short-term, it is unlikely that travel services exports to India will continue to be a major driver of future Canadian overseas export growth.
Figure 5: Canadian overseas exports growth (%, 2017-2024), sort by largest overseas export partners with available data
Text version - Figure 5
| Country | Total goods and services – % growth between 2017 and 2024 | Goods - % growth between 2017 and 2024 | Services - % growth between 2017 and 2024 |
|---|---|---|---|
| Data: Statistics Canada Tables 36-10-0023-01 and 12-10-0157-01 Source: Office of the Chief Economist, Global Affairs Canada. | |||
| European Union | 53.7% | 38.3% | 83.0% |
| United Kingdom | 59.5% | 57.5% | 65.2% |
| China | 20.9% | 21.5% | 18.6% |
| India | 223.0% | 20.4% | 635.8% |
| Japan | 24.7% | 23.5% | 32.8% |
| Mexico | 24.8% | 2.9% | 162.1% |
| Switzerland | 143.1% | 189.5% | 87.8% |
| South Korea | 35.8% | 37.6% | 29.0% |
| Hong Kong | 70.8% | 59.0% | 88.1% |
| Australia | 56.8% | 55.7% | 58.0% |
| Brazil | 47.1% | 38.9% | 63.1% |
| Singapore | 68.5% | 60.3% | 84.0% |
| Taiwan | 14.8% | 15.7% | 12.1% |
| Norway | 16.9% | 13.0% | 46.8% |
| Indonesia | 32.3% | 31.0% | 43.6% |
| Other overseas | 56.0% | 28.8% | 104.0% |
Outside of the EU, the UK and India, growth in the value of overseas exports was well distributed, with China in fourth place (with goods and services accounting for 6.6% of Canada’s total overseas growth), followed by Switzerland (5.6%), Japan (3.4%), Hong Kong (2.7%), Mexico (2.6%), South Korea (2.5%), and Australia (2.2%). It is additionally notable that trade agreements exist and supported trade growth with many of these countries, including Switzerland (EFTA), Japan and Australia (CPTPP), Korea (CKFTA) and Mexico (CUSMA).
Growth in the value of exports to China was mainly due to goods exports (5.3% of total overseas growth). Despite the relatively large growth in export value to China, the rate of growth in exports to China was 20.9% between 2017 and 2024, below the required growth rate of 50%. In fact, the rate of growth in goods and services exports to most other overseas partners with available data did not meet the targeted growth of 50%, with the exception being Switzerland, Hong Kong, Australia, and Singapore.
Canadian exports to Switzerland had the second fastest growth rate (after India), growing 143% between 2017 and 2024—goods grew 190% and services, 88%. In dollar value, growth in exports to Switzerland was the fifth largest contributor (5.6% of total overseas growth), with goods being the larger contributor (4.0% of total overseas growth). However, like the UK, growth in merchandise exports to Switzerland was entirely driven by gold.
The value of export growth to Japan was the sixth largest contributor to overseas export growth, with goods exports being the main contributor. However, similar to China, the rate of export growth to Japan (at 25% since 2017) is below the required growth rate of 50%.
The value of export growth to Hong Kong between 2017 and 2024 contributed 2.7% to overseas export growth. In percentage terms, goods exports to Hong Kong grew 59%, and services 88% since 2017. However, like the UK and Switzerland, growth in merchandise exports to Hong Kong was also entirely due to gold exports.
Supplemental analysis: excluding volatile drivers
To explore the sustainability of Canda’s diversification progress, we can conduct a supplemental analysis of Canada’s exports of a hypothetical situation if the volatility of gold and education services were removed. This is done by subtracting all goods exports to the UK, Switzerland and Hong Kong, and all services exports to India from both the 2017 base and the target calculation. As of 2024, Canada would be only slightly behind in meeting its target, as overseas exports in this hypothetical calculation were already 42.1% higher than they were in 2017. In other words, the rest of overseas exports would need to grow by 5.5% in 2025 to meet their diversification target—which is only slightly faster than the 5.15% average annual pace they achieved over 2017-2024.
Figure 6: Scenario—Canada's overseas goods and services exports excluding goods exports to the UK, Switzerland and Hong Kong, and services exports to India
Text version - Figure 6
| Year | Canada's overseas goods and services exports (excluding goods exports to the UK, Switzerland and Hong Kong, and services exports to India, $ million) | Annual exports value required to reach the target in 2025 ($ million) |
|---|---|---|
| Data: Statistics Canada Tables 36-10-0023-01 and 12-10-0157-01 Source: Office of the Chief Economist, Global Affairs Canada. | ||
| 2017 | 169,089 | 169,089 |
| 2018 | 187,516 | 179,657 |
| 2019 | 189,873 | 190,225 |
| 2020 | 173,754 | 200,793 |
| 2021 | 194,724 | 211,361 |
| 2022 | 232,307 | 221,929 |
| 2023 | 238,279 | 232,497 |
| 2024 | 240,353 | 243,065 |
| 2025 | 253,634 | |
Conclusion
Canada has achieved its overseas export diversification target set in the 2018 Fall Economic Statement one year ahead of schedule. While a deeper analysis reveals that approximately 30% of the growth is concentrated in a few volatile or unsustainable sectors, such as gold to the UK, Switzerland and Hong Kong, and education to India, Canada’s diversification progress was otherwise broad-based with many successes such as diversified growth to the EU, as well as to Japan, Mexico, and services exports growth to the UK and Switzerland. Even excluding gold to the UK, Switzerland and Hong Kong, and services to India, Canada would only be slightly behind in reaching its target and given another year (2025) of growth, other products may yet see additional growth in exports.
Bibliography
Global Affairs Canada, 2019. Canada's State of Trade 2019, Ottawa: Global Affairs Canada.
Government of Canada, 2018. Fall Economic Statement 2018, Ottawa: Finance Canada.
Roslyn Kunin and Associates, Inc. (RKA, Inc.), 2023. Economic Impact of International Education in Canada — An Update of 2022 Impact , Vancouver: s.n.
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