Canada’s economic freedom ranking plummets

Canada’s economic freedom ranking experienced a significant decline in the 2026 Fraser Institute report, dropping from 9th place in 2023 to 18th. The analysis relies on 2024 data to evaluate performance across five key areas: government size, legal systems and property rights, monetary stability, trade openness, and regulatory efficiency. These components determine how freely individuals can select employment, make purchases, or launch businesses. Countries excelling in these areas tend to attract investment, boost productivity, and maintain higher living standards over time.

Key factors behind the decline

The Fraser Institute identified three primary causes for Canada’s drop: an expanding government sector, increased regulatory burdens, and reduced trade openness. The steepest decline occurred in trade, driven by tariff policies that disrupted North American commerce throughout 2025. Meanwhile, the monetary stability component improved as inflation eased during the 2024 data year, while the legal system score remained largely unchanged.

In terms of government size, Canada ranked 101st out of 165 jurisdictions, indicating persistently high levels of taxation and public spending relative to economic output. This trend raises concerns about productivity, as Canada’s GDP per capita decreased by 2% between 2020 and 2024—the steepest five-year decline since the Great Depression and the worst performance among all OECD members.

Expert analysis

Matthew Mitchell, a senior fellow at the Fraser Institute and co-author of the 2026 report, warned that declining economic freedom often leads to lower living standards. “Canadians should be worried because when people are less economically free, their standards of living tend to suffer,” he stated.

Mitchell, who has contributed to multiple Fraser Institute releases, emphasizes that policy choices are key in shaping the freedom score trajectory.

Global comparisons

Hong Kong retained the top spot in the economic freedom index, followed by Switzerland, Singapore, New Zealand, and the United States in the top five. Germany ranked 19th, just below Canada, while France placed 39th, China 110th, and Russia 143rd. The ten lowest-ranked jurisdictions included Venezuela, Zimbabwe, Sudan, and Libya.

The Fraser Institute’s longitudinal data show that Hong Kong’s overall score has fallen every year since 2018, but the jurisdiction nonetheless preserved its leading position in the ranking.

Economic disparities between free and restricted markets are stark. In 2024, the average per-person GDP in the top quartile of the index reached $65,596, compared with $9,552 in the bottom quartile. Extreme poverty affected only 2% of people in the most economically free group, while 41% lived in extreme poverty in the least free. Life expectancy in the top quartile averaged 81 years, compared with 67 years in the lowest-ranked economies.

In the index, extreme poverty is measured as a daily income below US$4.10.

Investment considerations

Financial advisors in Canada now face clearer data when discussing portfolio strategies with clients. The gap between Canadian and American living standards has widened, with the average American earning approximately CA$23,757 more annually in GDP per capita. Diversification into the top-performing economies, Switzerland, Singapore, and New Zealand, remains attractive due to their stable institutions, strong property rights, open capital markets, and limited government interference.