(MENAFN- News Direct) >

Canada's standing in global economic freedom rankings has slipped again, even as new data shows the economy may be stabilizing after months of contraction.

The Fraser Institute's Economic Freedom of the World report, released September 25, ranks Canada 11th worldwide based on data from 2023 - down from 8th in last year's report. The index measures openness to trade, tax and regulatory burdens, government spending and property rights protections. Researchers say Canada's decline reflects rising government size and increased taxation since the pandemic.

“The index published in Economic Freedom of the World 2025 measures the degree to which people in 165 jurisdictions around the globe are allowed to make their own economic choices,” according to the Fraser Institute's website.

“Canadians should understand that when people are more economically free, they enjoy higher standards of living,” Matthew Mitchell, senior fellow at the Fraser Institute, said in a statement.

Don't Miss

• Want to retire with an extra $1.3M? See how Dave Ramsey's viral 7-step plan helps millions kill debt and build wealth - and how you can too
• A new nationwide survey of financial leaders warns Canada may face a recession in six months - protect your wallet with these 6 smart money moves ASAP
• Boomers are out of luck: Robert Kiyosaki warns that the 'biggest crash in history is coming' - here's his strategy to get rich before things get worse

Increased taxation driving Canada's decline in economic freedom

A major driver of Canada's slide is its poor showing on government size.

The Fraser Institute also ranks worldwide governments based on size,“where higher rankings indicate lower taxation and less government spending.” In 2014, Canada placed 71st globally on the measure of government size.

However, that ranking deteriorated sharply during the pandemic, when public spending surged - the nation now sits at 102nd. Fraser Institute analysts argue that high levels of government intervention erode the competitiveness of Canadian businesses and households compared to international peers.

Globally, overall economic freedom rankings saw Hong Kong maintain the top spot despite a declining score, while the U.S. ranked fifth and the U.K. 13th. Among G7 peers, Canada now sits behind both the U.S. and Germany.

Read more: Here are 5 expenses that Canadians (almost) always overpay for - and very quickly regret. How many are hurting you?

Potential GDP rebound complicates the picture

The report's release coincides with tentative signs of Canada's economic resilience, however.

After three months of decline, Statistics Canada reported July GDP rose by 0.2%, driven by mining, manufacturing and utilities. If August holds steady, the third quarter could post a modest 0.7% annualized gain, according to analysts, which could be enough to keep Canada safe from a recession this year.

While the Fraser Institute points to rising taxes and regulation as long-term drags, a short-term GDP recovery suggests other economic forces may be providing a cushion. Still, analysts warn the recovery is uneven: growth was concentrated in goods-producing industries, while services expanded only modestly.

Canada's economic outlook

Nevertheless, the Fraser Institute stresses that declining economic freedom carries real-world consequences. Its analysis links higher economic freedom to higher GDP per capita, lower poverty rates and longer life expectancy.

In 2023, countries in the top quartile of economic freedom recorded per-person GDP of US$66,434 (CDN$92,500), compared with just US$10,751 in the lowest quartile.

“Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives,” Mitchell said.

For Canadians, the concern is just how current fiscal and regulatory choices, not to mention any potential trade deals, will weigh on future prosperity, even as short-term economic signals show signs of hope.

What To Read Next

• Ray Dalio just raised a red flag for Americans who 'care' about their money - here's why Canadians should limit their exposure to U.S. investments
• The ultra-rich are pulling back on volatile stocks right now, warns investing legend - here are the 4 assets they're using to help shield their millions
• I'm almost 50 and don't have enough retirement savings. What should I do? Don't panic. Here are 6 solid ways you can catch up
• Here are the top 7 habits of 'quietly wealthy' Canadians. How many do you follow?

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

MENAFN25112025005728012573ID1110398205