It outlined three growth scenarios, each based on how fast key industries adapt to technological advancement, climate change, geopolitical tensions and demographic shifts that are blurring traditional sector boundaries.
The degree to which geopolitical turmoil subsides or escalates is a significant factor, as is Canada’s ability to adopt AI across industries such as mining, technology and defence, increasingly seen as political priorities.
The most optimistic scenario, where GDP jumps 9.3% over baseline expectations for 2035, hinges on a co-operative global approach to AI adoption and public trust in cybersecurity.
Nochane Rousseau, national managing partner at PwC Canada, said he is “confident that the most optimistic scenario is credible,” but there is still a lag in AI adoption in Canada.
“Considering the economic condition that we have in Canada and the uncertainty also related to the tariffs, some companies are not making the required investment,” Rousseau said in an interview.
AI uptake in Canada is about three-quarters of U.S. adoption, the report, which reviewed survey data, found.
In the middle scenario, where global decarbonization efforts fall short of sustainability goals and AI adoption lags, the report projects a 6.9% GDP boost over the baseline, or $3.57 trillion. The least optimistic forecast, which assumes geopolitical tensions hinder collaboration and mistrust in technology slows its use, pegs GDP growth at 2.1% above baseline, or $3.41 trillion.
Rousseau said there’s an opportunity for Canada to bridge its AI gap. Narrowing it will require investment and government support, the report suggested. Companies would need to devote more resources to research and development and consider new approaches to scaling innovation.
“You may remember that Canada was one of the initial players in AI,” Rousseau said. “The challenge for us is the commercialization of those technologies.”
Even if Canada’s economy realizes the most optimistic scenario, it would lag behind the U.S., which is expected to see a bigger boost of 14% over its baseline in the next decade.
“When we compare both results between Canada and the U.S., it is explained mostly by a much lower AI adoption by Canadian companies in Canada,” Rousseau said.
He added that there is an opportunity for growth if sectors work together alongside supportive government policies.
As Canada adjusts to new trade realities, the report estimates businesses will have limited resources to reconfigure and adjust to ongoing changes linked to climate and technology.
Corporations will have to collaborate across industries and likely pivot to serve adjacent markets or compete in new sectors — similar to larger companies moving into the nuclear energy space to supply electricity for data centres, the report suggested.
For example, food production and consumption face pressures not just from climate change but also urbanization and shifting consumer preferences. The report suggests the mining industry could increase sustainable supplies of fertilizers, such as potash, to make shrinking farmland more arable.
Mining, tech and defence sectors could gain
Overall, the report identified mining, technology and defence as key sectors that could benefit from AI adoption and government policy, and in turn, boost growth.
Since taking office, Prime Minister Mark Carney has unveiled major spending plans for national defence to help Canada meet NATO’s benchmark of the equivalent of 2% of GDP per year.
In June, Canada and its NATO allies agreed to hike their defence spending target to 5% of GDP by 2035. The new agreement will see Canada’s annual defence budget rise to roughly $150 billion.
“We have a very critical opportunity to capture the value around the defence opportunity,” said Rousseau.
Earlier this month, Bombardier Inc. pivoted its portfolio toward the defence sector, as its chief executive promised a larger portion of sales from Bombardier Defense over the next decade.
The defence sector needs everything from raw materials, munitions and vehicles to data, technology and AI — and related industries can benefit from the demand, the report said.
For example, steel manufacturers facing tariff pressures could supply steel to a Canadian shipbuilder, or a Canadian miner could provide materials for magnets and semiconductors used in military equipment.
Rousseau said the sector also opens doors for parts, equipment and infrastructure with dual purpose — goods that can serve both defence and civil markets.
Small and medium-sized businesses could also open shop for niche services such as precision machining or testing and certification, the report suggested.
For mining, Rousseau said Canada can leverage its critical minerals repository for electric vehicles and defence. But technology adoption will be critical, the report added.
Canada’s mining sector could benefit from AI and quantum computing to accelerate assessments and permitting, which would speed up projects and reduce environmental impacts and resource consumption.
Rousseau said federal government policies are key to growth. For example, Ottawa could establish a procurement policy that prioritizes buying goods and services from Canadian AI companies.
That means governments will need policies that enable innovation, attract skilled workers and instill trust in AI among businesses.
“Adoption is inseparable from trust and security, which heightens the imperative for governments to work closely with businesses to build confidence in what AI can do,” the report said.