Canada could lift GDP 7% by easing internal trade barriers

Canada could boost long-term economic output by nearly 7 per cent if it dismantles policy-related barriers that restrict the movement of goods, services, and labour across provinces, according to new analysis by the International Monetary Fund (IMF).

Despite being one of the world’s most open economies globally, Canada’s internal market remains fragmented, with non-geographic barriers equivalent to an average 9 per cent tariff nationwide.

Canada could raise long-term GDP by nearly 7 per cent by removing internal trade barriers that restrict interprovincial movement of goods, services, and labour, new analysis shows.
Policy-related frictions act like a 9 per cent internal tariff nationwide.
Liberalising high-impact sectors could deliver productivity-led gains worth about C$210 billion (~$153.04 billion).

Model-based estimates suggest that fully removing these barriers could add around C$210 billion (~$153.04 billion) to real GDP over time, driven largely by productivity gains rather than short-term demand, IMF said in a release.

While full liberalisation will be gradual, targeted reforms in high-impact sectors could deliver sizable benefits and improve economic resilience. Analysts argue that stronger federal–provincial coordination, wider mutual recognition of standards and credentials, and transparent benchmarking of internal trade barriers will be key to turning Canada’s fragmented domestic market into a more integrated national economy.

Fibre2Fashion News Desk (HU)