Economy Of Canada

Things To Know About The Canadian Economy

The economic output of a country is generally measured by gross domestic product brought to you by When the world economy is taken into consideration, the economy of developed countries comes to the limelight. One of the developed economic leaders in the world is Canada, which has built it’s the country’s economy by banking mining, education expertise, and manufacturing. The country has ranked 11th in the world in terms of GDP with 1.8 trillion in recent years. And, it is recognized as one of the wealthiest countries in the world. Canada has the highest economic freedom with the private to public property ratio of 60:40. Studies say, the overall GDP growth rate of the country is 0.5 percent, which is projected to increase to 2.2 percent in the coming years. The service industry of the country contributes about 69.8 percent to the GDP; agriculture contributes around 1.7 percent while other industries are contributing about 28.5 percent.

The unemployment rate of the country is 6.6 percent, below poverty line population is 12.9 percent and inflation is 1 percent. The labor force of Canada in the manufacturing sector is 13 percent, agriculture is 2 percent, and construction is 6 percent. The total labor force of service sector is estimated at 76 percent in the country. In foreign reserves, Canada has around 65.82 billion dollars and donate about 4.1 billion dollars. The revenue of the country is estimated 682.5 billion dollars against an expense of about 750 billion dollars.

Revenue Generating Industries In Economy of Canada

The primary revenue-generating industry in Canada is the service industry. The country employs around three-quarters of the entire population in this industry only. Other dominant, as well as essential industries of the country, are fish products, natural gas, chemicals, minerals, paper products, timber, and transport. The natural minerals like crude oil, aluminum, nickel, and gold the country produces. It has the world’s second-largest oil reserve.

Economical Background

By land area, Canada is the second-largest country of the world, and the country has 10th largest economy. After Canadian politics shifted to the prime minister’s liberal party, the government supports the crucial fossil fuel industry. The government also prioritizes green policies; the economic system mostly resembles the United States economy. The leading sectors which boost the economy of the country are petroleum, minerals, forest products, and automotive. Over three-quarters of the products are exported to the United States from Canada.

Standard Of Living Of The People

The standard of living for people in the country is considered while the overall economy is the prime concern. The population of Canada is around 34.6 million, 90 percent of the people in the country live within a hundred miles of the border of the United States.  The freshwater lakes in Canada are not that productive as it is not used for irrigation or hydropower generation. The farm-suitable land in the country is about 4.3 percent, so, the agricultural contribution to the GDP is 1.7 percent of the total. The farming land of Canada is less than the United States and Mexico, but the per capita GDP of Canada is 49,936 dollars, which is higher than in Mexico. Though the standard of living of the people in the United States is better than Canada, it is still much better than most of the countries in the world. The high standard of living, production patterns, and the economic system of the country are close to the United States.

Economic Sources Of The Country

The major export partners of Canada are china that is contributing 4.1 percent of the total export. And, the united states contribute about 75.2 percent, South Korea, around 0.81 percent, India about 0.86%, Mexico 1.51% and Japan approximately 1.93 percent.

The major import products of Canada are consumer goods, electricity, motor vehicles, chemicals, crude oil, machinery equipment, and motor vehicle parts. The country has spent around 547.874 billion dollars in importing these products from various countries. The main import partners of Canada are South Korea, the United Kingdom, Japan, Germany, Mexico, and the United States.

Open Markets

As per the WTO, the country has 435 nontariff measures in action from June 2018; the average tariff rate is 1.6%. The entire value of imports and exports is equal to 64.1% of the total GDP. In Canada, non-bank financial companies are extensively active in the business environment, while the banking sector is sound. Significant foreign investment is in telecommunication and aviation sectors that are capped by the Canadian government.

The Canadian Economy Is Dependent On The US

As the United States is the leading import and export partner of Canada, the economy is directly dependent on the US. The trade to the US and Mexico is started from the year 1994, and it is the largest exporter of electricity, uranium, oil, energy, and gas to the United States. Since Canada has not bordered any other countries except the US, it struggles in exporting products to other countries. The shipment of the goods to other territories becomes highly expensive for the country. However, Canada is benefitted from the vast discovery in Alberta, the oil sands. That resulted in the world’s third-largest oil reserve at 173.1 billion barrels. As per the US energy information administration, Canada is now the fifth largest exporter of oil in the world. After the government shifted to Trudeau’s liberal party, it promised to invest in the new infrastructure in the country. The government also plans to legalize marijuana.

Challenges Of The Economy

The Canadian economy is mainly dependent on natural resources and exporting to the United States. The extensive exploitation of natural recourses is adversely affecting the environment. Though the current government is emphasizing on the green policies, it is better not to exploit the natural recourses. However, the unequal distribution of the population in the country is also a challenge for the economy.

The environmental declination needs to be controlled as it can result in droughts, wildfire, and coastal flooding in the country. Though the Canadian economy is considered as one the most robust economy in the country, there are challenges that the government needs to overcome.