Canada's economy could grow exponentially by 2035 if businesses quickly track artificial intelligence adoption and respond to growing climate change threats, new research predicts.
The PWC Canada report is exploring ways to predict that Canada's GDP could reach $3.65 trillion by the end of the next decade with rapid action to close the adoption gap for AI. The report, released Wednesday, lists Canada GDP for 2023 at $2.89 trillion.
This report outlined three growth scenarios. Each is based on the extent to which key industries adapt to technological advancements, climate change, geopolitical tensions and demographic changes, blurring the boundaries of traditional sectors.
The extent to which geopolitical disruption subsides or escalates is a key factor in these estimates, with the ability to adopt artificial intelligence across industries such as mining, technology and defense, which is increasingly seen as a political priority.
The most optimistic scenario premise, with Canada's GDP rising 9.3% above baseline expectations in 2035, depends on the cooperative's global approach to AI adoption and public trust for cybersecurity.
Nochane Rousseau, national managing partner at PWC Canada, said, “I am confident that the most optimistic scenarios are reliable,” but so far, there have been delays in adopting AI in Canada.
“Given the economic situation we have in Canada and the uncertainty associated with tariffs, some companies are not making the necessary investments,” Rousseau said in an interview.
AI uptake in Canada is roughly three-quarters of US adoptions, a report reviewing survey data found.
In an interim scenario where global decarbonization efforts do not fall short of sustainability goals and delays in AI adoption, the report predicts GDP to increase by 6.9% from the expected baseline ($3.57 trillion). The least optimistic forecast, which assumes geopolitical tensions will hinder global efforts to hamper technology cooperation and mistrust, will slow its use, with GDP growth PEG at 2.1% above baseline, or $3.41 trillion.
Rousseau said Canada has an opportunity to bridge the AI recruitment gap.
To narrow that gap, investment and government support will be needed, the report suggests. He added that companies should devote more resources to research and development and consider new approaches to expand innovation.
“You may remember Canada was one of the first players in AI,” Rousseau said. “The challenge for us is the commercialization of these technologies.”
Even if Canada's economy achieves the most optimistic scenario, it would be behind the US.
“Comparing both the Canada and the US results is largely explained by much lower adoption of AI by Canadian companies,” Rousseau said.
Rousseau said there is an opportunity for the country to grow when different sectors work together with supportive government policies.
As Canada adapts to new trade realities, the report estimates that businesses have limited resources to reconstruct and adjust ongoing changes caused by climate change and technology.
Companies must work together across the industry, welcoming pivots to serve adjacent markets and compete in a whole new sector. This, like the paths adopted by large companies, has moved into the nuclear energy space to bridge the power needs of data centers.
Food production and consumption, for example, faces pressure from climate change as well as urbanization and changing consumer preferences. The report suggests that mining could help increase sustainable supply of fertilizers such as potash, making it more cultivated on reduced land.
Overall, the report identified mining, technology and defense as key sectors that could benefit from AI adoption and government policies, thus driving growth.
Since taking office, Prime Minister Mark Carney has announced key spending plans for national defense to help Canada meet the NATO defense spending benchmark, which is equivalent to 2% of annual GDP.
In June, Canada and its NATO allies agreed to effectively raise their defensive spending targets to 5% of their annual GDP by 2035. The new NATO agreement will increase Canada's annual defense budget to approximately $150 billion.
“We have a very important opportunity to capture value around defense opportunities,” Rousseau said.
Earlier this month, Business Jets Maker Bombardier Inc. pivoted its portfolio towards the defense sector.
The defense sector needs everything from raw materials, ammunition, vehicles to data, technology, AI, and all related industries can benefit from the demand.
For example, steel manufacturers facing tariff pressures can supply steel to Canada-based shipbuilders. Alternatively, Canadian miners can provide materials for magnets and semiconductors used in modern military equipment.
Rousseau said the defense department is opening the doors to parts, equipment and infrastructure for dual purposes. This can be used in the defence and civil markets.
Small and medium-sized businesses can also open shops for niche services such as precision machining and testing and certification, the report suggests.
For mining, Rousseau said Canada has the opportunity to leverage key mineral repositories for electric vehicles and defense.
However, the adoption of technology is important for miners, the report suggests.
The Canadian mining sector can benefit from AI and quantum computing to accelerate evaluation and permitting processes and speed up mining projects.
This would also help reduce the environmental impact and resource consumption of mining research and other activities, the report said.
Rousseau said federal policies are key to Canada's growth.
For example, governments can establish procurement policies that prioritize purchasing goods and services from Canadian AI companies.
This means that governments need to set policies that will enable innovation, attract skilled workers, and help instill trust in AI among businesses.
“Because recruitment cannot be separated from trust and security, it will increase the obligation for governments to work closely with businesses to build confidence in AI,” the report said.
The report, which was first published on September 24, 2025, by Canadian report.
Ritchika Duby, Canadian media
