IMF Says Canada Would Get Stimulus through Integration

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land Texas)

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Summary

Canada's central bank on Wednesday left its key interest rates unchanged as the economy copes with U.S. tariff pressure. The IMF says it has ideas on support.

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Integrate, IMF Suggests

As the Canadian prime minister continues his efforts to expand non-U.S. trade opportunities, the International Monetary Fund (IMF) said provincial economic integration would further boost growth opportunities.

Facing tariff pressures from U.S. President Donald Trump, several provinces in Canada made arrangements last year to remove internal trade barriers, though essentials like food were still protected. The IMF, however, said this creates a "patchwork" economy that could be limiting Canada's economic growth.

"With global growth under pressure and productivity constraints becoming more binding, the case for integrating Canada's internal market has likely never been stronger," the report read.

The IMF said in a report published Tuesday that internal trade barriers have the same impact as a 9% tariff on its goods. Modelling done by IMF economists suggest that eliminating all internal trade barriers could boost Canada's real gross domestic product (GDP) by 7% "over the long run." That, the IMF added, equated to around US$150 billion.

The Bank of Canada, meanwhile, said last week that trade pressures were weighing on the sentiment of business firms. In general, sales were week over the last year and those responding to bank surveys said they only expected slight gains moving forward.

"Export sales growth is expected to be modest," the bank report read. "A small but increasing share of businesses reported higher sales to non-U.S. markets in response to trade tensions with the United States."

The bank on Wednesday, however, left its lending rates unchanged. Meanwhile, Canadian Prime Minister Mark Carney, a former central bank governor himself, is working to halve the amount of U.S. trade, courting economies from China to the European Union since taking office last year.

Canada's Trade Diversification Efforts Continue

On Tuesday, Canadian Energy Minister Timothy Hodgson travelled overseas for the annual India Energy Week, the first such visit by a high-level Canadian delegate. The Canadian government in a statement said it's an emerging exporter of liquefied natural gas (LNG), it's sending more oil outside of North America through the expansion of the Trans Mountain pipeline and is looking to send liquefied petroleum gas (LPG) to Asian markets.

Meanwhile, India's economy is the fourth-largest importer of LNG, the third-largest importer of LPG and has the fourth-largest refining capacity in the world.

"Even efforts are underway in India to substantially scale up domestic oil production, significantly expand refining capacity, increase use of natural gas in the energy mix," a joint statement read. "Thus, India and Canada have significant potential to emerge strong collaborators in area of energy fuels."

Canada is already delivering super-cooled natural gas through its LNG Canada facility in British Columbia. On Monday, the developers of the planned Woodfibre LNG facility in British Columbia received two modules that would facilitate further construction, a pretreatment unit and a processing unit, bringing construction to nearly 60% complete. Subscribers to Industrial Info's Global Market Intelligence (GMI) Production and Pipelines project databases can learn more by viewing the project reports about Woodfibre's construction.

For crude oil, the Trans Mountain oil pipeline is the only artery capable of deliveries outside North America. An expansion project completed in 2024 nearly tripled the capacity on the 36-inch, 720-mile Trans Mountain system to a total of 890,000 barrels per day (BBL/d).

Alberta's government, meanwhile, is backing a new pipeline, the Northwest Coast Oil Pipeline, which counts Calgary-based energy companies Enbridge, South Bow and Trans Mountain as members of its advisory committee.

By the Numbers

• US$150 billion from provincial economic integration, IMF says
• 9% tariff-equivalent from internal trade barriers

Key Takeaways

• Provincial trade barriers inhibit growth, IMF says
• An agreement with India is the nation's latest success

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).