Canada dropped from 9th to 18th in a global economic freedom ranking, with government size, regulation, and trade openness all impacting
Canada's standing in a global measure of economic openness dropped nine positions in a single year, raising questions about the country's investment climate and what financial advisors should be telling clients about domestic allocation.
The Economic Freedom of the World 2026 annual report, released October 6, 2026, by the Fraser Institute, an independent, non-partisan public policy think-tank based in Vancouver, ranks Canada 18th out of 165 countries - a significant fall from its 2023 ranking of 9th. The report draws on 2024 data, the most recent year for which statistics can be compiled across all countries studied.
Economic freedom - defined as the degree to which individuals are able to make their own decisions about what to buy, where to work, and whether to start a business - is measured across five dimensions: the size of government, the soundness of the legal system and property rights, sound money, freedom to trade internationally, and the regulatory burden.
Countries that score well across those pillars consistently attract investment, produce faster productivity growth, and sustain higher living standards over time.
Canada's nine-place decline was driven by deterioration in three of those five areas: the size of government, regulation, and freedom to trade internationally. The steepest deterioration was in trade openness - a reflection of the tariff environment that first disrupted North American commerce throughout 2025. Sound money improved, as inflation eased during the 2024 data year, and the legal system score was essentially unchanged.
A pattern that predates the pandemic
The trade decline is notable, but the size-of-government drag is a structural story. Canada ranked 101st out of 165 countries on that dimension in the 2026 report; a position that reflects years of relatively high taxation and public spending as a share of the economy. This is not a new problem: the Fraser Institute has flagged Canada's government size as a persistent weakness across multiple editions of the report.
That structural drag sits alongside a deteriorating productivity picture that advisors are already navigating. As Wealth Professional reported earlier in 2026, Canada's GDP per capita fell by two per cent between 2020 and 2024 - the steepest five-year drop in living standards since the Great Depression and the worst performance among all OECD countries over the same period.
The economic freedom data now adds a structural lens to that headline: a country ranked 101st on government size is unlikely to generate the private-sector dynamism that productivity growth requires.
"Canadians should be worried because when people are less economically free, their standards of living tend to suffer," said Matthew Mitchell, senior fellow at the Fraser Institute and coauthor of the 2026 report.
What the global ranking reveals
Globally, Hong Kong retained top spot though its score has declined every year since 2018. Switzerland ranked second, Singapore third, New Zealand fourth, and the United States fifth. Germany, at 19th, now sits just one position below Canada. France ranked 39th, China 110th, and Russia 143rd. The 10 lowest-ranked jurisdictions included Venezuela, Zimbabwe, Sudan, and Libya.
The gap between countries at the top and bottom of the rankings carries direct implications for investors. According to data in the 2026 report, per-person GDP in the top quartile of economic freedom reached US$65,596 in 2024, compared to US$9,552 in the bottom quartile.
Extreme poverty - defined as living on less than US$4.10 per day - affected 2 per cent of people in the most-free quartile, against 41 per cent in the least-free. Life expectancy averaged 81 years in the freest countries, compared to 67 years in the least free.
The advisor conversation
For Canadian financial advisors, the nine-place decline is a concrete data point in a conversation many are already having with clients. The widening gap between Canadian and American living standards - with the average American now earning approximately CA$23,757 more per year in GDP per capita terms than the average Canadian - means that the case for international diversification is no longer merely theoretical.
The freedom rankings reinforce where that diversification may be most productive. Switzerland, Singapore, and New Zealand (all top-five finishers) share characteristics that align closely with what long-term investors seek: stable institutions, strong property rights, open capital markets, and manageable government footprints.
Canada's trajectory is not irreversible. Mitchell noted in the report that the recovery in global economic freedom since the pandemic, while incomplete, demonstrates that policy choices do move the needle.
But the 2026 data makes clear that the damage done to Canada's ranking over recent years, through higher government spending, greater regulatory complexity, and reduced trade openness, will require sustained policy discipline to undo.
