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The Economy of Canada: An Explainer

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Intro to the Canadian Economic system

Table of Contents

Canada’s economic system is very developed and one of many largest on this planet. In 2020, the nation’s annual gross home product (GDP) was $1.64 trillion in present USD, in line with the newest accessible World Bank knowledge. That made Canada the world’s ninth-largest economic system. Canada’s economic system is very depending on worldwide commerce with exports and imports of products and companies every comprising about one third of GDP. The nation’s three largest commerce companions are the U.S., China, and the U.Ok. Its three largest industries, measured by their contributions to GDP, are: actual property and rental and leasing; manufacturing; and mining, quarrying, and oil and gasoline extraction. Canada is house to e-commerce firm Shopify Inc. (SHOP.TO, SHOP), main banks such because the Royal Financial institution of Canada (RY.TO, RY), and power transportation and distribution firm Enbridge Inc. (ENB.TO, ENB). The CAD/USD alternate charge used on this story is 0.79611 as of July 21, 2021. Among the statistics under might differ between sources as a result of every supply makes use of its personal methodology for outlining and calculating statistics.

The COVID-19 pandemic prompted Canada’s economic system to drag again sharply within the first half of 2020 earlier than rebounding within the latter half of the yr. Within the second quarter of 2020, actual GDP fell 11.3% quarter-over-quarter (Q/Q), however rose 9.1% Q/Q within the third quarter after which 2.2% Q/Q within the fourth quarter of 2020, offsetting the steep decline earlier within the yr. Actual GDP was up 0.3% within the first quarter of 2021 in comparison with the primary quarter of 2020. The rise in first quarter GDP was fueled partly by low mortgage charges, rising housing demand, and authorities transfers to households and companies.

The Canadian Economic system by the Numbers

  • Canadian 2020 GDP: $1.64 trillion (World Rating: #9).
  • Canadian 2020 GDP per Capita: $53,796.25 (World Rating: #29).
  • Canadian 2020 GDP Progress: -6.428%.
  • Canadian 2020 Consumer Price Index (CPI) Inflation: 0.7%.
  • Canada’s Largest Business by GDP (2020): $1.539 billion (enterprise sector industries).
  • Dimension of Canada’s Enterprise sector industries by Greenback Worth (2020; primarily based on seasonally adjusted 2012 chained {dollars}): CA$1.539 billion ($1.225 billion).
  • Canada’s December 2020 Stability of Commerce in Items and Providers: a deficit of CA$36.2 billion ($28.8 billion) as a result of imports have been larger than exports.
  • Canada’s Largest Export Vacation spot in Could 2021: the U.S. (63.5% of products exports).
  • Canada’s Largest Import Origin in 2019: the U.S. (50.6% of products imports).
  • Canada’s Largest Items Export by $ Worth in 2021: crude petroleum CA$7.31 billion ($5.82).
  • Canada’s Largest Items Import by $ Worth in 2021: automobiles CA$3.13 billion ($2.49).

The above knowledge mirror the state of Canada’s economic system previous to the worldwide financial shock ensuing from the COVID-19 pandemic.

Canada’s Prime Industries: Enterprise, Service-Producing, and Items Producing

Canada’s three largest industries comprise almost a 3rd of the nation’s complete GDP. These three industries and their contributions to GDP in 2020 have been: enterprise sector, which accounted for CA$1.539 billion ($1.225 billion) of GDP; service-producing, CA$1.329 billion ($1.058 billion), of GDP; and items producing industries, CA$.545 billion ($.433 billion), of GDP. Collectively, they make use of 15.96 million folks, in line with Statistics Canada.

Actual Property and Rental and Leasing

Canada’s actual property and rental and leasing business is comprised of institutions engaged within the following kinds of actions: actual property administration; promoting, renting, or shopping for actual property for others; appraising actual property; rental and leasing of tangible belongings similar to automotive gear; and leasing of non-financial intangible belongings similar to copyrighted works. GDP for the business, which employs about 2.51 million folks, rose 3.72% in 2021, in line with the Authorities of Canada.

Among the greatest firms within the business are actual property funding trusts (REITs), together with Canadian Condo Properties REIT (CAR.UN), RioCan REIT (REI.UN), and Allied Properties REIT (AP.UN).

Manufacturing

Canada’s manufacturing business is engaged within the bodily or chemical transformation of supplies or substances into new merchandise. These merchandise might both be completed items for consumption or semi-finished items for use in manufacturing processes. Canada’s industries manufacture meals, chemical compounds, petroleum, fabricated metallic merchandise, equipment, transportation gear, and different merchandise. GDP for the business, which employs roughly 1.4 million folks, shrank 0.8% in Could 2021, in line with the Authorities of Canada.

Some main Canadian producers embrace: ATS Automation Tooling Programs (ATA.TO), a customized engineer and producer of business automated manufacturing programs; Ballard Energy Programs Inc. (BLDP.TO, BLDP), a producer of hydrogen gas cells; and NFI Group Inc. (NFI.TO), a producer of industrial quality transit buses.

Mining, Quarrying, and Oil and Gasoline Extraction

Canada’s mining, quarrying, and oil and gasoline extraction business is primarily engaged within the extraction of naturally occurring minerals. The business is dominated by oil and gasoline extraction, however different kinds of mining exercise embrace mining coal and a variety of metals, together with gold, silver, copper, nickel, and extra. Stone, sand, gravel, clay, and ceramic mining and quarrying are additionally a part of the business, in addition to mining for potash. GDP for the business, which employs roughly 0.18 million folks, grew 0.3% in Could 2021, in line with the Authorities of Canada.

A few of Canada’s biggest mining companies embrace: Nutrien Ltd. (NTR.TO, NTR), a producer and distributor of potash, nitrogen, and phosphate merchandise; Barrick Gold Corp. (ABX.TO, GOLD), a gold mining firm; and Teck Sources Ltd. (TECK.B.TO, TECK), a pure useful resource firm that mines for zinc, copper, molybdenum, gold, and metallurgical coal.

Under is a better take a look at Canada’s 10 greatest industries by contribution to the economic system. Collectively, they’re an necessary reflection of Canada’s economic system as a result of they contribute about three quarters of the nation’s GDP.

Main Canadian Industries (2019)
Business Identify Contribution to GDP in 2019 (%) Contribution to GDP in 2019 ($B) Variety of Folks Employed (M)
Actual Property, Rental, and Leasing 12.7 203.5 0.3
Manufacturing  10.0 159.5 1.6
Mining, Quarrying, and Oil and Gasoline Extraction 7.9 126.4  0.2
Development  7.2 114.5 1.0
Well being Care and Social Help 7.0 112.0 2.0
Finance and Insurance coverage 6.9 110.2 0.7
Public Administration 6.7 107.4 1.1
Skilled, Scientific, and Technical Providers 6.0 95.9 1.0
Instructional Providers 5.3 84.5 1.4
Wholesale Commerce 5.2 82.5 Employment determine not represented in knowledge supply.

Supply: Statistics Canada (industry GDP and employment knowledge); business GDP contributions primarily based on seasonally adjusted chained 2012 Canadian {dollars}; conversion to U.S. {dollars} primarily based on creator’s calculations utilizing CAD/USD alternate charge of 0.80638 as of June 29, 2021.

Canada’s Prime Buying and selling Companions

In Could 2021, Canada’s commerce steadiness for items and companies was CA$1.8 billion deficit ($1.41). Complete imports have been CA$50.9 billion ($40.13 billion). Inventories, gross mounted capital formation, and exports every comprise roughly a 3rd, respectively, of Canada’s GDP, in line with the Authorities of Canada. The nation’s high three buying and selling companions in 2020, by complete quantity of exports and imports of products and companies, have been the U.S., China, and the U.Ok.

#1 Buying and selling Accomplice: the U.S.

In July 2021, Canada ran an total surplus of CA$0.78 billion ($0.61) in its steadiness of commerce (BOT). Complete exports of products amounted to CA$53.7 billion ($42.32). Complete exports of companies have been $56.3 billion whereas companies imports amounted to CA$53 billion ($41.77). In Could 2021, Canada’s high items export to the U.S. was crude petroleum; its high items import from the U.S. was automobiles, in line with the Observatory of Financial Complexity.

Canada’s commerce relationship with the U.S., in addition to Mexico, is ruled by the United States-Mexico-Canada Settlement (USMCA), which got here into pressure on July 1, 2020. The settlement consists of key provisions in areas similar to dairy and agriculture, cars, mental property, and labor. USMCA changed the North American Free Commerce Settlement (NAFTA), the commerce settlement that had ruled commerce relations between the three international locations since 1994.

# 2 Buying and selling Accomplice: China

Canada ran a big BOT deficit with China in 2020. Complete exports of products amounted to CA$31.6 billion ($23.6) whereas complete items imports have been CA$51.9 billion ($38.7), leading to a deficit in Canada’s commerce of products with China. Complete 2019 exports of companies have been $6.1 billion whereas complete companies imports amounted to $2.5 billion, leading to a companies commerce surplus with China, in line with Statistics Canada. Canada’s high items export to China in 2020 was coal. Its high items import from China was computer systems.

#3 Buying and selling Accomplice: the U.Ok.

Canada ran a BOT surplus with the U.Ok. in 2020. Complete exports of products have been $14.9 billion whereas complete items imports have been $5.85 billion, leading to a surplus in Canada’s commerce of products with the U.Ok. Complete exports of companies amounted to $1.4 billion whereas complete companies imports have been $1.8 billion, leading to a slight companies commerce deficit with the U.Ok., in line with Statistics Canada. Canada’s high items export to the U.Ok. in 2020 was pearls, valuable stones, metals, and cash. Its high items import from the U.Ok. was equipment, nuclear reactors, and boilers.

The Canada-United Kingdom Commerce Continuity Settlement (Canada-UK TCA) just lately got here into impact on April 1, 2021. Following Brexit, the U.Ok.’s exit from the European Union (EU), the Canada-UK TCA preserves the primary advantages of Canada’s commerce agreements with the EU as outlined beneath the Canada-European Union Complete Financial and Commerce Settlement (CETA).

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