THE CANADIAN ECONOMY

Canada’s economy is multifaceted and highly advanced. Foreign trade accounts for around 45 per cent of the country’s GDP, and the United States is the largest trading associate. On the expenditure end, household utilization is the integral element of GDP and is responsible for 58 per cent of its entire usage, followed by gross fixed capital formation (22 per cent) and government spending of 19 per cent. Exports of goods and products represent 32 per cent of GDP while imports represent 33 per cent, excluding 1 per cent of total GDP. Non-Benefit organizations work for households’ final utilization spending and financing in statement account for the left 2 per cent.

Due to its direct monetary connections with the United States, during the recession-year 2009, Canada’s economy contracted 2.7% over the last year. But Canada managed to recover quickly from the impact of the recession. Nonetheless, because of the pre-crisis fiscal policy, a strong financial framework, a comparatively vigorous extrinsic sector, and its asset-rich western territories’ economic stability. Since 2010, there has been an increase in the growth again, and between 2010 and 2013, Canada’s economy expanded 1.4% per year on an average. From 1981 to 2007, there were buoyant net exports of between 2% and 9%, which made unpresuming positive contributions to Canada’s monetary growth. However, in recent years the nation has experienced negative net exports of around 2% of GDP because imports growth has outrun exports growth from 2010.

CANADA’S GDP GROWTH RATE

In 2008, Canada’s economy contracted the maximum since the 2003 power outage; the GDP fell to 0 .7 per cent. In 2009 February, Canada’s economy contracted for the seventh consecutive month because of the collapse of automobile production and decline in the construction activity. Canada’s economy contracted at its fastest pace since 1991 in the first quarter, as the country’s businesses downsized spending amid a slump in demand. In 2010, Canada’s economy expanded at a 5 per cent annual rate in the fourth quarter, faster than estimated by the Bank of Canada, thereby raising pressure on policymakers to increase interest rates later this year. Canadian GDP went up by 0.8 per cent in the second quarter of 2014, following a revised 0.2 per cent increase in the first quarter. It was the largest quarterly profit since the third quarter of 2011, as all economy sectors increased except non-profit organizations working for households.

The Canadian economy contracted 2.1 per cent in the first three months of 2020, i.e. Q1, after expanding 0.1 per cent in the previous year’s quarter. It was the sharpest contraction since Q1 of 2009, considering the restrictions imposed in March to control the coronavirus pandemic, which included the closure of trivial businesses, border shutdowns, and limitations on travel. Household expenditure contracted at a record 2.3%, in the midst of job losses, financial instability, and limited opportunities to spend. Also, the government’s spending dropped by 1 per cent, it was the sharpest fall since Q1 of 2013, majorly because of school termination and abridged government administration. Moreover, the business funding in hardware and equipment contracted consecutively for four quarters, i.e. -3.5%. Exports also dropped by 3%, and imports fell softer by 2.8% because it’s significant trade partners also imposed public health restrictions. Calculated at a yearly rate, real GDP jumped 8.2 per cent, the most since Q1 2009, after an upwardly revised 0.6 per cent growth in the prior period.

CANADA’S CONSUMER PRICE ANALYSIS FOR 10 YEARS

In 2009 Q3 Canada’s consumer price dropped the most, exhibiting the biggest fall in the past half-century because of the jump in the gasoline prices. But in Q4 of 2009, the consumer prices increased after five months, putting an end on the longest streak of fall since 1953. In 2010 Q1, Canada’s core inflation rate unexpectedly accelerated due to increased automobile insurance and accommodation prices during the Vancouver Winter Olympics. In Q4 of 2010, Canada experienced inflation at two years high. The annual inflation rate unexpectedly jumped to a two year high of 2.4 per cent.

Consumer prices in Canada dropped by 0.2 per cent year-on-year in April 2020, after it went up by 0.9 per cent in the earlier months and compared with market assumptions of a 0.1 per cent fall. It was the first downfall in the consumer price index after September 2009, as gasoline prices jumped at a record pace of -39.3% vs 21.2% in March in the midst of lesser oil demand because of the restricted travel and business terminations and oversupply in the oil sector.

CANADA’S EXPORT ANALYSIS FOR 10 YEARS

In March 2016, Exports in Canada fell by 4.8 per cent month-on-month to $41 billion, the lowest since January 2014. Sales of motor vehicles and other hardware dropped by 6.0 per cent; buyer goods declined by 4.6 per cent, metal and non-metallic mineral products went down by 5.4 per cent. On an annual basis, exports went down by 5.1 per cent. Canada Exports were at a record high in 2018. It was the sixth increase over the past seven months. Exports from Canada rose by 1.6 per cent in April 2018 to a record CAD 48.6 billion. Sales of metal and non-metallic mineral products increased by 9.1 per cent, boosted by unwrought precious metals (+25.3 per cent). Also, exports of consumer goods increased by 5.4 per cent and energy products by 2.3 per cent.

On the other hand, sales of aircraft and other transportation equipment and hardware fell to -14.2 per cent. Among major trading partners, exports rose to the US (1.8 per cent), China (14.3 per cent) and Japan (0.3 per cent). Year over year, total exports rose 3.1%.

In May 2017, Canada Exports Hit All-Time High with a rise of 1.3 per cent and recorded a high of C$48.7 billion for a third consecutive monthly gain. Total exports from Canada rose 1.3 per cent to a record high of in May, a third consecutive monthly gain.

Exports from Canada sank 29.7% from a month earlier to CAD 32.7 billion in April of 2020, the lowest level since January of 2010, below market expectations of CAD 42.1 billion. Shipments fell mostly for motor vehicles and parts (-82.9%), the largest decline ever observed, linked to production shutdowns in all motor vehicle assembly plants across the country. Exports of engines and parts (-84.0%) also fell significantly in April.

CANADA’S IMPORTS ANALYSIS FOR 10 YEARS

November 2017, Imports to Canada advanced 5.8 per cent month-over-month to CAD 48.7 billion in November of 2017 from CAD 46.0 billion in October. It is the strongest increase since July of 2009, boosted by purchases of electronic and electrical machineries and parts; motor hardware and parts and aircraft and other transportation equipment and parts.

In January 2019, Imports to Canada increased by 1.5 per cent month-over-month to a record CAD 51.8 billion. Acquisition of aircraft and other transportation hardware and equipment led the increase (52.6 per cent). On the contrary, imports of energy products declined by 12.1 per cent, mainly on lesser imports of refined petroleum products (-16.0 per cent). In Q1 of 2018, Canada’s imports fell after a record high. The imports declined by 4.3 per cent month-over-month to CAD 47.7 billion. Imports from the United States fell by 1.8 per cent to CAD 30.9 billion, mainly because of decreased purchases of logging, mining and construction machinery and equipment.

In 2021, Canada’s GDP is set to bounce back with greater power as strong fiscal and monetary policies will hold up household demands. In return, Household spending should profit from a lower unemployment rate and recovering buyers confidence. Also, after the recently resumed domestic lockdown and travel limitations and future advancements in commodity prices, it gives rise to significant risks to the outlook. There can be a forecasted growth of 4.9% in 2021, which is down 0.1 percentage points from last month’s forecast, and a growth of 3.1% in 2022. In 2021 we can see economic growth of 4.5 per cent or more and a return to our pre-crisis GDP quickly in early 2022 if the mass distribution of vaccines begins by the mid-2021. But if the vaccine is not distributed by late 2021, then economic growth would be limited to around 4 per cent. The recovery of the Canadian economy would be delayed to even late 2022. Forecast for Real GDP in 2021 is to post growth of 5.3 per cent and 3.5 per cent in 2022. The year 2020 was the deepest recession in contemporary times. It is estimated that the economic activities went down by 5.3 per cent last year.