Canada Drops Nine Places to 18th in Global Economic Freedom Ranking

Canada has tumbled nine places down the international economic openness index within just one year, according to a newly released report.

Canada dropped from ninth to 18th place in the global economic freedom index published this week by the Fraser Institute. This year’s Economic Freedom of the World report relies on data from 2024, the last available year for which data can be compiled across 165 countries.

Canada’s nine-place drop is concerning, Fraser Institute senior fellow and report co-author Matthew Mitchell said.

“Canadians should be worried because when people are less economically free, their standards of living tend to suffer,” Mitchell said in a press release. “Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives.”

The report defines economic freedom as how much choice people have over what they buy, where they work, and whether to start a business. The index determines this by measuring openness to trade, tax and regulatory burdens, government spending, protection of property, and the soundness of a country’s money.

Canada’s slip down the rankings stemmed from deterioration across three key economic freedom metrics: government size (reflecting taxation and spending as a percentage of the economy), regulatory frameworks, and freedom to trade internationally.

Canada’s track record in managing government size has been an issue over the past several decades, according to the report. The country’s high tax obligations and extensive government spending have resulted in a ranking of 101st out of 165 nations in the newest evaluation.

Hong Kong kept the number one spot as the world’s most economically free place. Switzerland ranked second on the index, followed by Singapore, New Zealand, and the United States.

Rounding out the top 10 are Ireland, Denmark, Australia, and Mauritius, with Finland, the Netherlands, and the United Kingdom tying for 10th.

Iceland and Japan were tied for 13th place, Estonia and Luxembourg tied for 15th, and Taiwan was in 17th ahead of Canada in the 18th slot. Germany was 19th and Chile was 20th.

China was ranked at 110th and Russia sat at 143rd, the report said. The 10 lowest-ranked countries were the Democratic Republic of Congo, Egypt, Malawi, Algeria, Iran, Myanmar, Libya, Sudan, Zimbabwe, and Venezuela.

Other Findings

Global economic freedom declined in the aftermath of the COVID-19 pandemic as governments introduced new regulations, erected trade barriers, expanded the size of government, and then printed money to finance the changes, the report said.

Governments have begun to reverse these policies, but the average country’s economic freedom hasn’t bounced back to its pre-pandemic state, the report said.

It also found that people living in countries with high levels of economic freedom are more prosperous, have more political and civil liberties, and live longer.

The data demonstrates that throughout 2024, economically free nations achieved an average per-capita GDP level of US$65,596, creating a dramatic gap with the least free economies, which managed only averaged US$9,552 per person.

Countries in the top 25 percent also had lower poverty rates.  The most-economically free countries saw just 2 percent of their populations struggling with extreme poverty compared to 41 percent in the bottom 25 percent.