![Economic growth of Canada](https://upload.wikimedia.org/wikipedia/commons/5/59/Economic_growth_of_Canada.jpg)
The economy of Canada is a
highly developed mixed-market economy
A mixed economy is variously defined as an economic system blending elements of a market economy with elements of a planned economy, markets with state interventionism, or private enterprise with public enterprise. Common to all mixed economies ...
. It is the
8th-largest GDP by nominal and
15th-largest GDP by PPP in the world. As with other developed nations, the country's economy is dominated by the
service industry
The tertiary sector of the economy, generally known as the service sector, is the third of the three economic sectors in the three-sector model (also known as the economic cycle). The others are the primary sector (raw materials) and the second ...
which employs about three quarters of
Canadians
Canadians (french: Canadiens) are people identified with the country of Canada. This connection may be residential, legal, historical or cultural. For most Canadians, many (or all) of these connections exist and are collectively the source of ...
.
Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
has the third-highest total estimated value of
natural resources
Natural resources are resources that are drawn from nature and used with few modifications. This includes the sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest and cultural value. O ...
, valued at
US$
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
33.98 trillion in 2019. It has the world's
third-largest proven oil reserves and is the
fourth-largest exporter of crude oil. It is also the
fifth-largest exporter of natural gas.
According to the
Corruption Perceptions Index
The Corruption Perceptions Index (CPI) is an index which ranks countries "by their perceived levels of public sector corruption, as determined by expert assessments and opinion surveys." The CPI generally defines corruption as an "abuse of entru ...
, Canada is perceived as one of the least corrupt countries in the world,
and is one of the world's top ten
trading nation
A trading nation (also known as a trade-dependent economy, or an export-oriented economy) is a country where international trade makes up a large percentage of its economy.
Smaller nations (by population) tend to be more trade-dependent than larg ...
s, with a highly
globalized
Globalization, or globalisation (Commonwealth English; see spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term ''globalization'' first appeared in the early 20t ...
economy. , Canada is ranked 15th on
The Heritage Foundation
The Heritage Foundation (abbreviated to Heritage) is an American conservative think tank based in Washington, D.C. that is primarily geared toward public policy. The foundation took a leading role in the conservative movement during the presiden ...
's index of
economic freedom
Economic freedom, or economic liberty, is the ability of people of a society to take economic actions. This is a term used in economic and policy debates as well as in the philosophy of economics. One approach to economic freedom comes from the l ...
. Its average household
disposable income
Disposable income is total personal income minus current income taxes. In national accounts definitions, personal income minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major c ...
per capita is "well above" the
OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
average.
The
Toronto Stock Exchange
The Toronto Stock Exchange (TSX; french: Bourse de Toronto) is a stock exchange located in Toronto, Ontario, Canada. It is the 10th largest exchange in the world and the third largest in North America based on market capitalization. Based in t ...
is the eighth-largest
stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
in the world by
market capitalization
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by t ...
, listing over 1,500 companies with a combined market capitalization of over US$3 trillion.
In 2021, Canadian trade in goods and services reached trillion.
[ Canada's exports totalled over billion, while its imported goods were worth over billion, of which approximately billion originated from the United States, billion from non-U.S. sources.][PDF version]
/ref> In 2018, Canada had a trade deficit
The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balance ...
in goods of billion and a trade deficit in services of billion.[
Canada is unusual among developed countries in the importance of the ]primary sector
The primary sector of the economy includes any industry involved in the extraction and production of raw materials, such as farming, logging, fishing, forestry and mining.
The primary sector tends to make up a larger portion of the economy in de ...
, with the logging
Logging is the process of cutting, processing, and moving trees to a location for transport. It may include skidding, on-site processing, and loading of trees or logs onto trucks or skeleton cars.
Logging is the beginning of a supply chain ...
and energy
In physics, energy (from Ancient Greek: ἐνέργεια, ''enérgeia'', “activity”) is the quantitative property that is transferred to a body or to a physical system, recognizable in the performance of work and in the form of heat a ...
industries being two of Canada's most important. Canada also has a sizable manufacturing sector, based in Central Canada
Central Canada (french: Centre du Canada, sometimes the Central provinces) is a region consisting of Canada's two largest and most populous provinces: Ontario and Quebec. Geographically, they are not at the centre of Canada but instead overlap w ...
, with the automobile industry
The automotive industry comprises a wide range of companies and organizations involved in the design, development, manufacturing, marketing, and selling of motor vehicles. It is one of the world's largest industries by revenue (from 16 % such ...
and aircraft industry
An aircraft is a vehicle that is able to fly by gaining support from the air. It counters the force of gravity by using either static lift or by using the dynamic lift of an airfoil, or in a few cases the downward thrust from jet engines ...
being especially important. With the world's longest coastline, Canada has the eighth-largest commercial fishing and seafood industry in the world. Canada is one of the global leaders of the entertainment software industry
The software industry includes businesses for development, maintenance
Maintenance may refer to:
Biological science
* Maintenance of an organism
* Maintenance respiration
Non-technical maintenance
* Alimony, also called ''maintenance ...
. It is a member of the APEC
The Asia-Pacific Economic Cooperation (APEC ) is an inter-governmental forum for 21 member economies in the Pacific Rim that promotes free trade throughout the Asia-Pacific region. , G7, G20
The G20 or Group of Twenty is an intergovernmental forum comprising 19 countries and the European Union (EU). It works to address major issues related to the global economy, such as international financial stability, climate change mitigation, ...
, OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
and WTO
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and e ...
, and was formerly a member of NAFTA
The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
until the USMCA came into force in 2020. In Canada, the USMCA is officially known as the Canada–United States–Mexico Agreement (CUSMA) in English and the Accord Canada–États-Unis–Mexique (ACEUM) in French.
Overview
With the exception of a few island nations in the Caribbean
The Caribbean (, ) ( es, El Caribe; french: la Caraïbe; ht, Karayib; nl, De Caraïben) is a region of the Americas that consists of the Caribbean Sea, its islands (some surrounded by the Caribbean Sea and some bordering both the Caribbean Se ...
, Canada is the only major North American country to use the parliamentary system
A parliamentary system, or parliamentarian democracy, is a system of democratic governance of a state (or subordinate entity) where the executive derives its democratic legitimacy from its ability to command the support ("confidence") of the ...
of government. As a result, Canada has developed its own social and political institutions, distinct from most other countries in the world.[Global Systems by David J Rees with Michael G Jones, Chapter 4, ] Though the Canadian economy is closely integrated with the American economy
The United States is a highly developed mixed-market economy and has the world's largest nominal GDP and net wealth. It has the second-largest by purchasing power parity (PPP) behind China. It has the world's seventh-highest per capita GDP ...
, it has developed unique economic institutions.
The Canadian economic system generally combines elements of private enterprise
A privately held company (or simply a private company) is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in the respective listed markets, but rather the company's stock is ...
and public enterprise
A state-owned enterprise (SOE) is a Government, government entity which is established or nationalised by the ''national government'' or ''provincial government'' by an executive order or an act of legislation in order to earn Profit (econom ...
. Many aspects of public enterprise, most notably the development of an extensive social welfare
Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet Basic needs, basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refe ...
system to redress social and economic inequities, were adopted after the end of World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
in 1945.
Approximately 89% of Canada's land is Crown land
Crown land (sometimes spelled crownland), also known as royal domain, is a territorial area belonging to the monarch, who personifies the Crown. It is the equivalent of an entailed estate and passes with the monarchy, being inseparable from it. ...
. Canada has one of the highest levels of economic freedom
Economic freedom, or economic liberty, is the ability of people of a society to take economic actions. This is a term used in economic and policy debates as well as in the philosophy of economics. One approach to economic freedom comes from the l ...
in the world. Today Canada closely resembles the U.S. in its market-oriented economic system and pattern of production. As of 2019, Canada has 56 companies in the Forbes Global 2000
The ''Forbes'' Global 2000 is an annual ranking of the top 2000 public companies in the world, published by ''Forbes'' magazine. "The Global 2000" annual ranking is assembled by ''Forbes'' using a weighted assessment of four metrics: sales, profi ...
list, ranking ninth just behind South Korea and ahead of Saudi Arabia.
International trade
International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy)
In most countries, such trade represents a significant ...
makes up a large part of the Canadian economy, particularly of its natural resources. In 2009, agriculture, energy, forestry and mining
Mining is the extraction of valuable minerals or other geological materials from the Earth, usually from an ore body, lode, vein, seam, reef, or placer deposit. The exploitation of these deposits for raw material is based on the economic via ...
exports accounted for about 58% of Canada's total exports. Machinery, equipment, automotive products and other manufactures accounted for a further 38% of exports in 2009. In 2009, exports accounted for about 30% of Canada's GDP. The United States is by far its largest trading partner, accounting for about 73% of exports and 63% of imports as of 2009. Canada's combined exports and imports ranked 8th among all nations in 2006.
About 4% of Canadians are directly employed in primary resource fields, and they account for 6.2% of GDP. They are still paramount in many parts of the country. Many, if not most, towns in northern Canada, where agriculture is difficult, exist because of a nearby mine or source of timber. Canada is a world leader in the production of many natural resources such as gold
Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile met ...
, nickel
Nickel is a chemical element with symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel is a hard and ductile transition metal. Pure nickel is chemically reactive but large pieces are slow to ...
, uranium
Uranium is a chemical element with the symbol U and atomic number 92. It is a silvery-grey metal in the actinide series of the periodic table. A uranium atom has 92 protons and 92 electrons, of which 6 are valence electrons. Uranium is weak ...
, diamonds
Diamond is a solid form of the element carbon with its atoms arranged in a crystal structure called diamond cubic. Another solid form of carbon known as graphite is the chemically stable form of carbon at room temperature and pressure, b ...
, lead
Lead is a chemical element with the symbol Pb (from the Latin ) and atomic number 82. It is a heavy metal that is denser than most common materials. Lead is soft and malleable, and also has a relatively low melting point. When freshly cu ...
, and in recent years, crude petroleum
Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crude ...
, which, with the world's second-largest oil reserves, is taking an increasingly prominent position in natural resources extraction. Several of Canada's largest companies are based in natural resource industries, such as Encana
Ovintiv Inc. is a hydrocarbon exploration and production company organized in Delaware and headquartered in Denver, United States. It was founded and headquartered in Calgary, Alberta, under its previous name Encana. It was the largest energy c ...
, Cameco
Cameco Corporation (formerly Canadian Mining and Energy Corporation) is the world's largest publicly traded uranium company, based in Saskatoon, Saskatchewan, Canada. In 2015, it was the world's second largest uranium producer, accounting for 18 ...
, Goldcorp
Goldcorp Inc. was a gold production company headquartered in Vancouver, British Columbia, Canada. The company employed about 15,800 people worldwide, engaged in gold mining and related activities including exploration, extraction, processing and ...
, and Barrick Gold
Barrick Gold Corporation is a mining company that produces gold and copper with 16 operating sites in 13 countries. It is headquartered in Toronto, Ontario, Canada. It has mining operations in Argentina, Canada, Chile, Côte d'Ivoire, Democrati ...
. The vast majority of these products are exported, mainly to the United States. There are also many secondary and service industries that are directly linked to primary ones. For instance one of Canada's largest manufacturing industries is the pulp and paper
The pulp and paper industry comprises companies that use wood as raw material and produce pulp, paper, paperboard and other cellulose-based products.
Manufacturing process
The pulp is fed to a paper machine where it is formed as a paper web an ...
sector, which is directly linked to the logging
Logging is the process of cutting, processing, and moving trees to a location for transport. It may include skidding, on-site processing, and loading of trees or logs onto trucks or skeleton cars.
Logging is the beginning of a supply chain ...
business.
The reliance on natural resources has several effects on the Canadian economy and Canadian society. While manufacturing and service industries are easy to standardize, natural resources vary greatly by region. This ensures that differing economic structures developed in each region of Canada, contributing to Canada's strong regionalism. At the same time the vast majority of these resources are exported, integrating Canada closely into the international economy. Howlett and Ramesh argue that the inherent instability of such industries also contributes to greater government intervention in the economy, to reduce the social impact of market changes.
Natural resource industries also raise important questions of sustainability. Despite many decades as a leading producer, there is little risk of depletion. Large discoveries continue to be made, such as the massive nickel find at Voisey's Bay
Voisey's Bay is a bay of the Atlantic Ocean in Labrador, Canada. The bay is located south of the community of Nain. The bay is heavily indented with numerous inlets and islands and is extremely rocky. It is the site of the Voisey's Bay Mine.
...
. Moreover, the far north remains largely undeveloped as producers await higher prices or new technologies as many operations in this region are not yet cost effective. In recent decades Canadians have become less willing to accept the environmental destruction associated with exploiting natural resources. High wages and Aboriginal land claims have also curbed expansion. Instead, many Canadian companies have focused their exploration, exploitation and expansion activities overseas where prices are lower and governments more amenable. Canadian companies are increasingly playing important roles in Latin America, Southeast Asia, and Africa.
The depletion of renewable resources has raised concerns in recent years. After decades of escalating overutilization the cod fishery all but collapsed in the 1990s, and the Pacific salmon industry also suffered greatly. The logging
Logging is the process of cutting, processing, and moving trees to a location for transport. It may include skidding, on-site processing, and loading of trees or logs onto trucks or skeleton cars.
Logging is the beginning of a supply chain ...
industry, after many years of activism, has in recent years moved to a more sustainable model, or to other countries.
Data
The following table shows the main economic indicators in 1980–2021 (with IMF staff estimates for 2022–2027). Inflation below 5% is in green.
Unemployment rate
Export trade
Export trade from Canada measured in US dollars. In 2021, Canada exported US$503.4 billion.
That dollar amount reflects a 19.5% gain since 2017 and a 29.1% increase from 2020 to 2021.
Import trade
Import trade in 2017 measured in US dollars.
Measuring productivity
Productivity measures are key indicators of economic performance and a key source of economic growth and competitiveness. The Organisation for Economic Co-operation and Development (OECD)'s[The OECD produces an annual report on member nations who share the goal of "contributing to the development of the world economy" by attaining the "highest sustainable economic growth and employment and a rising standard of living while maintaining financial stability."] ''Compendium of Productivity Indicators'', published annually, presents a broad overview of productivity levels and growth in member nations, highlighting key measurement issues. It analyses the role of "productivity as the main driver of economic growth and convergence" and the "contributions of labour, capital and MFP in driving economic growth".[page 3] According to the definition above "MFP is often interpreted as the contribution to economic growth made by factors such as technical and organisational innovation" (OECD 2008,11). Measures of productivity include Gross Domestic Product
Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...
(GDP)(OECD 2008,11) and multifactor productivity
In economics, total-factor productivity (TFP), also called multi-factor productivity, is usually measured as the ratio of aggregate output (e.g., GDP) to aggregate inputs. Under some simplifying assumptions about the production technology, growt ...
.
Multifactor productivity
Another productivity measure, used by the OECD, is the long-term trend in multifactor productivity (MFP) also known as total factor productivity
In economics, total-factor productivity (TFP), also called multi-factor productivity, is usually measured as the ratio of aggregate output (e.g., GDP) to aggregate inputs. Under some simplifying assumptions about the production technology, growt ...
(TFP). This indicator assesses an economy's "underlying productive capacity ('potential output'), itself an important measure of the growth possibilities of economies and of inflationary pressures". MFP measures the residual growth that cannot be explained by the rate of change in the services of labour, capital and intermediate outputs, and is often interpreted as the contribution to economic growth made by factors such as technical and organisational innovation. (OECD 2008,11)
According to the OECD's annual economic survey of Canada in June 2012, Canada has experienced weak growth of multi-factor productivity (MFP) and has been declining further since 2002. One of the ways MFP growth is raised is by boosting innovation and Canada's innovation indicators such as business R&D and patenting rates were poor. Raising MFP growth is "needed to sustain rising living standards, especially as the population ages".
Since 2010 productivity growth has picked up, almost entirely driven by above average multifactor productivity growth. However, productivity on the whole still lags behind the upper half of OECD countries such as the United States. Canada's productivity is now around the median OECD productivity, close to that of Australia. More can be done to increase productivity, such as increasing the productivity of capital through improving the capital stock to output ratio and capital quality. This could be achieved through the liberalization of internal trade barriers, as suggested in the OECD's latest Canadian economic survey.
Bank of Canada
The mandate of the central bank—the Bank of Canada
The Bank of Canada (BoC; french: Banque du Canada) is a Crown corporation and Canada's central bank. Chartered in 1934 under the ''Bank of Canada Act'', it is responsible for formulating Canada's monetary policy,OECD. OECD Economic Surveys: Ca ...
is to conduct monetary policy that "preserves the value of money by keeping inflation low and stable".
Monetary Policy Report
The Bank of Canada issues its bank rate announcement through its Monetary Policy Report which is released eight times a year. The Bank of Canada
The Bank of Canada (BoC; french: Banque du Canada) is a Crown corporation and Canada's central bank. Chartered in 1934 under the ''Bank of Canada Act'', it is responsible for formulating Canada's monetary policy,OECD. OECD Economic Surveys: Ca ...
, a federal crown corporation, has the responsibility of Canada's monetary system. Under the inflation-targeting monetary policy that has been the cornerstone of Canada's monetary and fiscal policy since the early 1990s, the Bank of Canada sets an inflation target The inflation target was set at 2 per cent, which is the midpoint of an inflation range of 1 to 3 per cent. They established a set of inflation-reduction targets to keep inflation "low, stable and predictable" and to foster "confidence in the value of money", contribute to Canada's sustained growth, employment gains and improved standard of living.
In a January 9, 2019 statement on the release of the Monetary Policy Report, Bank of Canada Governor Stephen S. Poloz
Stephen S. Poloz (born 1955) is a Canadian banker and was the ninth governor of the Bank of Canada. He is also a member of the board of directors for the Bank for International Settlements.
Background
Poloz was born in Oshawa, the son of a mo ...
summarized major events since the October report, such as "negative economic consequences" of the US-led trade war with China. In response to the ongoing trade war "bond yields have fallen, yield curves have flattened even more and stock markets have repriced significantly" in "global financial markets". In Canada, low oil prices will impact Canada's "macroeconomic outlook". Canada's housing sector is not stabilizing as quickly as anticipated.
Inflation targeting
During the period that John Crow
John William Crow (born 22 January 1937) was the fifth Governor of the Bank of Canada from 1987 to 1994, succeeding Gerald Bouey. He was succeeded by Gordon Thiessen.
Born in London, England, he went to Parmiter's School also he served with ...
was Governor of the Bank of Canada—1987 to 1994— there was a worldwide recession
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
and the bank rate rose to around 14% and unemployment topped 11%. Although since that time inflation-targeting has been adopted by "most advanced-world central banks", in 1991 it was innovative and Canada was an early adopter when the then-Finance Minister Michael Wilson approved the Bank of Canada's first inflation-targeting in the 1991 federal budget. The inflation target was set at 2 per cent. Inflation is measured by the total consumer price index
A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time.
Overview
A CPI is a statistica ...
(CPI). In 2011 the Government of Canada and the Bank of Canada extended Canada's inflation-control target to December 31, 2016. The Bank of Canada uses three unconventional instruments to achieve the inflation target: "a conditional statement on the future path of the policy rate", quantitative easing
Quantitative easing (QE) is a monetary policy action whereby a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity. Quantitative easing is a novel form of monetary pol ...
, and credit easing
Quantitative easing (QE) is a monetary policy action whereby a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity. Quantitative easing is a novel form of monetary pol ...
.
As a result, interest rates and inflation eventually came down along with the value of the Canadian dollar. From 1991 to 2011 the inflation-targeting regime kept "price gains fairly reliable".
Following the Financial crisis of 2007–08
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...
the narrow focus of inflation-targeting as a means of providing stable growth in the Canadian economy was questioned. By 2011, the then-Bank of Canada Governor Mark Carney
Mark Joseph Carney (born March 16, 1965) is a Canadian economist and banker who served as the governor of the Bank of Canada from 2008 to 2013 and the governor of the Bank of England from 2013 to 2020. Since October 2020, he is vice chairman and ...
argued that the central bank's mandate would allow for a more flexible inflation-targeting in specific situations where he would consider taking longer "than the typical six to eight quarters to return inflation to 2 per cent".
On July 15, 2015, the Bank of Canada
The Bank of Canada (BoC; french: Banque du Canada) is a Crown corporation and Canada's central bank. Chartered in 1934 under the ''Bank of Canada Act'', it is responsible for formulating Canada's monetary policy,OECD. OECD Economic Surveys: Ca ...
announced that it was lowering its target for the overnight rate by another one-quarter percentage point, to 0.5 per cent "to try to stimulate an economy that appears to have failed to rebound meaningfully from the oil shock woes that dragged it into decline in the first quarter". According to the Bank of Canada announcement, in the first quarter of 2015, the total Consumer price index
A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time.
Overview
A CPI is a statistica ...
(CPI) inflation was about 1 per cent. This reflects "year-over-year price declines for consumer energy products". Core inflation in the first quarter of 2015 was about 2 per cent with an underlying trend in inflation at about 1.5 to 1.7 per cent.
In response to the Bank of Canada's July 15, 2015 rate adjustment, Prime Minister Stephen Harper
Stephen Joseph Harper (born April 30, 1959) is a Canadian politician who served as the 22nd prime minister of Canada from 2006 to 2015. Harper is the first and only prime minister to come from the modern-day Conservative Party of Canada, ...
explained that the economy was "being dragged down by forces beyond Canadian borders such as global oil prices, the European debt crisis, and China's economic slowdown" which has made the global economy "fragile".
The Chinese stock market had lost about US$3 trillion of wealth by July 2015 when panicked investors sold stocks, which created declines in the commodities markets, which in turn negatively impacted resource-producing countries like Canada.
The Bank's main priority has been to keep inflation at a moderate level. As part of that strategy, interest rates were kept at a low level for almost seven years. Since September 2010, the key interest rate (overnight rate) was 0.5%. In mid 2017, inflation remained below the Bank's 2% target, (at 1.6%) mostly because of reductions in the cost of energy, food and automobiles; as well, the economy was in a continuing spurt with a predicted GDP growth of 2.8 percent by year end. Early on July 12, 2017, the bank issued a statement that the benchmark rate would be increased to 0.75%.
Following the COVID-19 pandemic, critics have pointed out that the Bank of Canada’s inflation-targeting has had unintended consequences, such as fuelling an increase in home prices and contributing to wealth inequalities by supporting higher equity values.
Key industries
In 2020, the Canadian economy had the following relative weighting by the industry as a percentage value of GDP:[Gross domestic product (GDP) at basic prices, by industry, annual average (x 1,000,000)](_blank)
Statistics Canada, Table 36-10-0434-03, 2018.
Service sector
The service sector in Canada is vast and multifaceted, employing about three quarters of Canadians and accounting for 70% of GDP. The largest employer is the retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and t ...
sector, employing almost 12% of Canadians. The retail industry is concentrated mainly in a small number of chain stores clustered together in shopping mall
A shopping mall (or simply mall) is a North American term for a large indoor shopping center, usually anchored by department stores. The term "mall" originally meant a pedestrian promenade with shops along it (that is, the term was used to refe ...
s. In recent years, there has been an increase in the number of big-box store
A big-box store (also hyperstore, supercenter, superstore, or megastore) is a physically large retail establishment, usually part of a chain of stores. The term sometimes also refers, by extension, to the company that operates the store. The t ...
s, such as Wal-Mart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
(of the United States), Real Canadian Superstore
Real Canadian Superstore is a chain of supermarkets owned by Canadian food retailing giant Loblaw Companies. Its name is often shortened to Superstore, or, less commonly, RCSS.
Originating in Western Canada in the late 1970s/early 1980s, the b ...
, and Best Buy
Best Buy Co. Inc. is an American multinational consumer electronics retailer headquartered in Richfield, Minnesota. Originally founded by Richard M. Schulze and James Wheeler in 1966 as an audio specialty store called Sound of Music, it was rebra ...
(of the United States). This has led to fewer workers in this sector and the migration of retail jobs to the suburbs.
The second-largest portion of the service sector is the business service, and it employs only a slightly smaller percentage of the population. This includes the financial services
Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...
, real estate
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...
, and communications industries. This portion of the economy has been rapidly growing in recent years. It is largely concentrated in the major urban centres, especially Toronto
Toronto ( ; or ) is the capital city of the Canadian province of Ontario. With a recorded population of 2,794,356 in 2021, it is the most populous city in Canada and the fourth most populous city in North America. The city is the ancho ...
, Montreal
Montreal ( ; officially Montréal, ) is the List of the largest municipalities in Canada by population, second-most populous city in Canada and List of towns in Quebec, most populous city in the Provinces and territories of Canada, Canadian ...
and Vancouver
Vancouver ( ) is a major city in western Canada, located in the Lower Mainland region of British Columbia. As the List of cities in British Columbia, most populous city in the province, the 2021 Canadian census recorded 662,248 people in the ...
(see Banking in Canada
Banking in Canada is one of Canada's most important industries with several banks being among its largest and most profitable companies.
It is dominated by a small number of large banks, with the six largest combining for 90% of the market shar ...
).
The education and health sectors are two of Canada's largest, but both are primarily under the influence of the government. The health care industry has been quickly growing and is the third-largest in Canada. Its rapid growth has led to problems for governments who must find money to fund it.
Canada has an important high tech
High technology (high tech), also known as advanced technology (advanced tech) or exotechnology, is technology that is at the cutting edge: the highest form of technology available. It can be defined as either the most complex or the newest te ...
industry, and a burgeoning film, television, and entertainment industry creating content for local and international consumption (see Media in Canada
The media of Canada is diverse and highly regionalized. News media, both print and digital and in both official languages, is largely dominated by a handful of major media corporations. The largest of these corporations is the country’s nati ...
). Tourism
Tourism is travel for pleasure or business; also the theory and practice of touring (disambiguation), touring, the business of attracting, accommodating, and entertaining tourists, and the business of operating tour (disambiguation), tours. Th ...
is of ever increasing importance, with the vast majority of international visitors coming from the United States. Casino gaming is currently the fastest-growing component of the Canadian tourism industry, contributing $5 billion in profits for Canadian governments and employing 41,000 Canadians as of 2001.
Manufacturing
The general pattern of development for wealthy nations was a transition from a raw material production-based economy to a manufacturing-based economy and then to a service-based economy. At its World War II peak in 1944, Canada's manufacturing sector accounted for 29% of GDP, declining to 10.37% in 2017. Canada has not suffered as greatly as most other rich, industrialized nations from the pains of the relative decline in the importance of manufacturing since the 1960s. A 2009 study by Statistics Canada
Statistics Canada (StatCan; french: Statistique Canada), formed in 1971, is the agency of the Government of Canada commissioned with producing statistics to help better understand Canada, its population, resources, economy, society, and cultur ...
also found that, while manufacturing declined as a relative percentage of GDP from 24.3% in the 1960s to 15.6% in 2005, manufacturing volumes between 1961 and 2005 kept pace with the overall growth in the volume index of GDP. Manufacturing in Canada was especially hit hard by the financial crisis of 2007–08
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...
. As of 2017, manufacturing accounts for 10% of Canada's GDP, a relative decline of more than 5% of GDP since 2005.
Central Canada is home to branch plant
It is not entirely evident who first used the branch plant economy concept; however, it has been extensively used in Canadian and UK literature since the 1970s. This concept broadly describes the negative consequences on the growth of the regions ...
s to all the major American and Japanese automobile makers and many parts factories owned by Canadian firms such as Magna International
Magna International Inc. is a Canadian parts manufacturer for automakers. It is one of the largest companies in Canada and was recognized on the 2020 ''Forbes'' Global 2000. The company is the largest automobile parts manufacturer in North Ameri ...
and Linamar Corporation
Linamar Corporation (TSX:LNR) is an advanced manufacturing company where the intersection of leading-edge technology and deep manufacturing expertise is creating solutions that power vehicles, motion, work and lives for the future. The Company i ...
.
Steel
Canada was the world's nineteenth-largest steel exporter in 2018. In year-to-date 2019 (through March), further referred to as YTD 2019, Canada exported 1.39 million metric tons of steel, a 22 percent decrease from 1.79 million metric tons in YTD 2018. Based on available data, Canada's exports represented about 1.5 percent of all steel exported globally in 2017. By volume, Canada's 2018 steel exports represented just over one-tenth the volume of the world's largest exporter, China. In value terms, steel represented 1.4 percent of the total goods Canada exported in 2018. The growth in exports in the decade since 2009 has been 29%. The largest producers in 2018 were ArcelorMittal
ArcelorMittal S.A. is a Luxembourgian multinational steel manufacturing corporation headquartered in Luxembourg City. It was formed in 2006 from the takeover and merger of Arcelor by Indian-owned Mittal Steel. ArcelorMittal is the second larg ...
, Essar Steel Algoma
Algoma Steel Inc. (formerly Algoma Steel; Essar Steel Algoma) is an integrated primary steel producer located on the St. Marys River in Sault Ste. Marie, Ontario, Canada. Its products are sold in Canada and the United States as well as overseas ...
, and the first of those alone accounted for roughly half of Canadian steel production through its two subsidiaries. The top two markets for Canada's exports were its NAFTA
The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
partners, and by themselves accounted for 92 percent of exports by volume. Canada sent 83 percent of its steel exports to the United States in YTD 2019. The gap between domestic demand and domestic production increased to -2.4 million metric tons, up from -0.2 million metric tons in YTD 2018. In YTD 2019, exports as a share of production decreased to 41.6 percent from 53 percent in YTD 2018.
In 2017, heavy industry
Heavy industry is an industry that involves one or more characteristics such as large and heavy products; large and heavy equipment and facilities (such as heavy equipment, large machine tools, huge buildings and large-scale infrastructure); o ...
accounted for 10.2% of Canada's Greenhouse gas emissions.
Mining
Canada is one of the largest producers of metals (as of 2019):
In 2019, the country was also the 4th largest world producer of sulfur
Sulfur (or sulphur in British English) is a chemical element with the symbol S and atomic number 16. It is abundant, multivalent and nonmetallic. Under normal conditions, sulfur atoms form cyclic octatomic molecules with a chemical formula ...
; the world's 7th largest producer of molybdenum
Molybdenum is a chemical element with the symbol Mo and atomic number 42 which is located in period 5 and group 6. The name is from Neo-Latin ''molybdaenum'', which is based on Ancient Greek ', meaning lead, since its ores were confused with lea ...
; the 7th worldwide producer of cobalt
Cobalt is a chemical element with the symbol Co and atomic number 27. As with nickel, cobalt is found in the Earth's crust only in a chemically combined form, save for small deposits found in alloys of natural meteoric iron. The free element, pr ...
; the 8th largest world producer of lithium
Lithium (from el, λίθος, lithos, lit=stone) is a chemical element with the symbol Li and atomic number 3. It is a soft, silvery-white alkali metal. Under standard conditions, it is the least dense metal and the least dense solid el ...
; the 8th largest world producer of zinc
Zinc is a chemical element with the symbol Zn and atomic number 30. Zinc is a slightly brittle metal at room temperature and has a shiny-greyish appearance when oxidation is removed. It is the first element in group 12 (IIB) of the periodi ...
; the 13th largest world producer of gypsum
Gypsum is a soft sulfate mineral composed of calcium sulfate dihydrate, with the chemical formula . It is widely mined and is used as a fertilizer and as the main constituent in many forms of plaster, blackboard or sidewalk chalk, and drywall. ...
; the 14th worldwide producer of antimony
Antimony is a chemical element with the symbol Sb (from la, stibium) and atomic number 51. A lustrous gray metalloid, it is found in nature mainly as the sulfide mineral stibnite (Sb2S3). Antimony compounds have been known since ancient time ...
; the world's 10th largest producer of graphite
Graphite () is a crystalline form of the element carbon. It consists of stacked layers of graphene. Graphite occurs naturally and is the most stable form of carbon under standard conditions. Synthetic and natural graphite are consumed on large ...
; in addition to being the 6th largest world producer of salt
Salt is a mineral composed primarily of sodium chloride (NaCl), a chemical compound belonging to the larger class of salts; salt in the form of a natural crystalline mineral is known as rock salt or halite. Salt is present in vast quantitie ...
. It was the 2nd largest producer in the world of uranium
Uranium is a chemical element with the symbol U and atomic number 92. It is a silvery-grey metal in the actinide series of the periodic table. A uranium atom has 92 protons and 92 electrons, of which 6 are valence electrons. Uranium is weak ...
in 2018.
Energy
Canada has access to cheap sources of energy because of its geography. This has enabled the creation of several important industries, such as the large aluminum
Aluminium (aluminum in American and Canadian English) is a chemical element with the symbol Al and atomic number 13. Aluminium has a density lower than those of other common metals, at approximately one third that of steel. It has ...
industries in British Columbia and Quebec. Canada is also one of the world's highest per capita consumers of energy.
Electricity
The electricity sector in Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
has played a significant role in the economic and political life of the country since the late 19th century. The sector is organized along provincial and territorial lines. In a majority of provinces, large government-owned
State ownership, also called government ownership and public ownership, is the ownership of an industry, asset, or enterprise by the state or a public body representing a community, as opposed to an individual or private party. Public ownersh ...
integrated public utilities play a leading role in the generation
A generation refers to all of the people born and living at about the same time, regarded collectively. It can also be described as, "the average period, generally considered to be about 20–30 years, during which children are born and gr ...
, transmission
Transmission may refer to:
Medicine, science and technology
* Power transmission
** Electric power transmission
** Propulsion transmission, technology allowing controlled application of power
*** Automatic transmission
*** Manual transmission
*** ...
and distribution Distribution may refer to:
Mathematics
*Distribution (mathematics), generalized functions used to formulate solutions of partial differential equations
* Probability distribution, the probability of a particular value or value range of a vari ...
of electricity. Ontario
Ontario ( ; ) is one of the thirteen provinces and territories of Canada.Ontario is located in the geographic eastern half of Canada, but it has historically and politically been considered to be part of Central Canada. Located in Central Ca ...
and Alberta
Alberta ( ) is one of the thirteen provinces and territories of Canada. It is part of Western Canada and is one of the three prairie provinces. Alberta is bordered by British Columbia to the west, Saskatchewan to the east, the Northwest Ter ...
have created electricity market
In a broad sense, an electricity market is a system that facilitates the exchange of electricity-related goods and services. During more than a century of evolution of the electric power industry, the economics of the electricity markets had un ...
s in the last decade in order to increase investment and competition in this sector of the economy. In 2017, the electricity sector accounted for 10% of total national greenhouse gas emissions. Canada has substantial electricity trade with the neighbouring United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
amounting to 72 TWh exports and 10 TWh imports in 2017.
Hydroelectricity
Hydroelectricity, or hydroelectric power, is Electricity generation, electricity generated from hydropower (water power). Hydropower supplies one sixth of the world's electricity, almost 4500 TWh in 2020, which is more than all other Renewabl ...
accounted for 59% of all electric generation in Canada in 2016, making Canada the world's second-largest producer of hydroelectricity after China. Since 1960, large hydroelectric projects, especially in Quebec
Quebec ( ; )According to the Canadian government, ''Québec'' (with the acute accent) is the official name in Canadian French and ''Quebec'' (without the accent) is the province's official name in Canadian English is one of the thirtee ...
, British Columbia
British Columbia (commonly abbreviated as BC) is the westernmost province of Canada, situated between the Pacific Ocean and the Rocky Mountains. It has a diverse geography, with rugged landscapes that include rocky coastlines, sandy beaches, ...
, Manitoba
Manitoba ( ) is a Provinces and territories of Canada, province of Canada at the Centre of Canada, longitudinal centre of the country. It is Canada's Population of Canada by province and territory, fifth-most populous province, with a population o ...
and Newfoundland and Labrador
Newfoundland and Labrador (; french: Terre-Neuve-et-Labrador; frequently abbreviated as NL) is the easternmost province of Canada, in the country's Atlantic region. The province comprises the island of Newfoundland and the continental region ...
, have significantly increased the country's generation capacity.
The second-largest single source of power (15% of the total) is nuclear power, with several plants in Ontario generating more than half of that province's electricity and one generator in New Brunswick
New Brunswick (french: Nouveau-Brunswick, , locally ) is one of the thirteen provinces and territories of Canada. It is one of the three Maritime provinces and one of the four Atlantic provinces. It is the only province with both English and ...
. This makes Canada the world's sixth-largest electricity producer generated by nuclear power, producing 95 TWh in 2017.
Fossil fuels provide 19% of Canadian electric power, about half as coal (9% of the total), and the remainder a mix of natural gas and oil. Only five provinces use coal for electricity generation. Alberta, Saskatchewan, and Nova Scotia rely on coal for nearly half of their generation, while other provinces and territories use little or none. Alberta and Saskatchewan also use a substantial amount of natural gas. Remote communities, including all of Nunavut and much of the Northwest Territories, produce most of their electricity from diesel generators at high economic and environmental costs. The federal government has set up initiatives to reduce dependence on diesel-fired electricity.
Non-hydro renewables are a fast-growing portion of the total, at 7% in 2016.
Oil and Gas
Canada possesses extensive oil and gas resources centered in Alberta, and the Northern Territories but is also present in neighboring British Columbia
British Columbia (commonly abbreviated as BC) is the westernmost province of Canada, situated between the Pacific Ocean and the Rocky Mountains. It has a diverse geography, with rugged landscapes that include rocky coastlines, sandy beaches, ...
and Saskatchewan
Saskatchewan ( ; ) is a Provinces and territories of Canada, province in Western Canada, western Canada, bordered on the west by Alberta, on the north by the Northwest Territories, on the east by Manitoba, to the northeast by Nunavut, and on t ...
. The vast Athabasca oil sands give Canada the world's third-largest reserves of oil after Saudi Arabia and Venezuela, according to USGS
The United States Geological Survey (USGS), formerly simply known as the Geological Survey, is a scientific agency of the United States government. The scientists of the USGS study the landscape of the United States, its natural resources, a ...
. The oil and gas industry represents 27% of Canada's total greenhouse gas emissions
Greenhouse gas emissions from human activities strengthen the greenhouse effect, contributing to climate change. Most is carbon dioxide from burning fossil fuels: coal, oil, and natural gas. The largest emitters include coal in China and lar ...
, an increase of 84% since 1990, mostly due to the development of the oil sands.
Historically, an important issue in Canadian politics is the interplay between the oil and energy industry in Western Canada
Western Canada, also referred to as the Western provinces, Canadian West or the Western provinces of Canada, and commonly known within Canada as the West, is a Canadian region that includes the four western provinces just north of the Canada ...
and the industrial heartland of Southern Ontario. Foreign investment in Western oil projects has fueled Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
's rising dollar. This has raised the price of Ontario's manufacturing exports and made them less competitive, a problem similar to the decline of the manufacturing sector in the Netherlands.
The National Energy Policy of the early 1980s attempted to make Canada oil-sufficient and to ensure equal supply and price of oil in all parts of Canada, especially for the eastern manufacturing base. This policy proved deeply divisive as it forced Alberta to sell low-priced oil to eastern Canada. The policy was eliminated 5 years after it was first announced amid a collapse of oil prices in 1985. The new Prime Minister Brian Mulroney
Martin Brian Mulroney ( ; born March 20, 1939) is a Canadian lawyer, businessman, and politician who served as the 18th prime minister of Canada from 1984 to 1993.
Born in the eastern Quebec city of Baie-Comeau, Mulroney studied political sci ...
had campaigned against the policy in the 1984 Canadian federal election
The 1984 Canadian federal election was held on September 4, 1984, to elect members to the House of Commons of the 33rd Parliament of Canada.
In one of the largest landslide victories in Canadian political history, the Progressive Conservative ...
. One of the most controversial sections of the Canada–United States Free Trade Agreement
The Canada–United States Free Trade Agreement (CUSFTA), official name as the Free Trade Agreement between Canada and the United States of America (french: links=no, Accord de libre-échange entre le Canada et les États-Unis d'Amérique), wa ...
of 1988 was a promise that Canada would never charge the United States more for energy than fellow Canadians.
Agriculture
Canada is also one of the world's largest suppliers of agricultural products, particularly wheat and other grains. Canada is a major exporter of agricultural products, to the United States and Asia. As with all other developed nations, the proportion of the population and GDP devoted to agriculture fell dramatically over the 20th century. The agriculture and agri-food manufacturing sector created $49.0 billion to Canada's GDP in 2015, accounting for 2.6% of total GDP. This sector also accounts for 8.4% of Canada's Greenhouse gas emissions.
The Canadian agriculture industry receives significant government subsidies and support as with other developed nations. However, Canada has strongly supported reducing market influencing subsidies through the World Trade Organization
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and e ...
. In 2000, Canada spent approximately CDN$4.6 billion on support for the industry. $2.32 billion was classified under the WTO designation of "green box" license, meaning it did not directly influence the market, such as money for research or disaster relief. All but $848.2 million were subsidies worth less than 5% of the value of the crops they were provided for.
Free-trade agreements
Free-trade agreements in force
:Source:
* Canada–Israel Free Trade Agreement
The Canada–Israel Free Trade Agreement (CIFTA) is a free trade agreement between Canada and Israel.
History
It was signed on July 31, 1996, and came into effect on January 1, 1997. It was Canada's first free trade agreement outside of the We ...
(Entered into force January 1, 1997, modernization ongoing)
* Canada–Chile Free Trade Agreement Canada–Chile Free Trade Agreement (CCFTA) is a trade agreement between Canada and Chile. It was signed on December 5, 1996, in Santiago, Chile and came into effect on July 5, 1997. Tariffs on 75 percent of bilateral trade were immediately eliminat ...
(Entered into force July 5, 1997)
* Canada–Costa Rica Free Trade Agreement The Canada–Costa Rica Free Trade Agreement (CCRFTA) is a free trade agreement between Costa Rica and Canada. It was signed on April 23, 2001 in Ottawa, Ontario, and came into effect on November 1, 2002. It is the first bilateral free trade agreeme ...
(Entered into force November 1, 2002, modernization ongoing)
* Canada–European Free Trade Association Free Trade Agreement
The Canada–European Free Trade Association Free Trade Agreement is a trade agreement between Canada and the member states of the European Free Trade Association (Iceland, Norway, Switzerland and Liechtenstein). Signed in Davos, Switzerland on Jan ...
(Iceland, Norway, Switzerland and Liechtenstein; entered into force July 1, 2009)
* Canada–Peru Free Trade Agreement The Canada–Peru Free Trade Agreement (''CPFTA'') is a free trade agreement between Peru and Canada. It was signed on 29 May 2008 and entered into force on 1 August 2009.
The CPFTA facilitates establishment of free trade, creation of opportunities ...
(Entered into force August 1, 2009)
* Canada–Colombia Free Trade Agreement (Signed November 21, 2008, entered into force August 15, 2011; Canada's ratification of this FTA had been dependent upon Colombia's ratification of the "Agreement Concerning Annual Reports on Human Rights and Free Trade Between Canada and the Republic of Colombia" signed on May 27, 2010)
* Canada–Jordan Free Trade Agreement (Signed on June 28, 2009, entered into force October 1, 2012)
* Canada–Panama Free Trade Agreement (Signed on May 14, 2010, entered into force April 1, 2013)
* Canada–South Korea Free Trade Agreement (Signed on March 11, 2014, entered into force January 1, 2015)
* Canada–Ukraine Free Trade Agreement
Canada–Ukraine Free Trade Agreement (CUFTA, French: ''Accord de libre-échange Canada-Ukraine'' (ALECU), Ukrainian: ''Угода про вільну торгівлю між Україною та Канадою'') is a free-trade agreement betwee ...
(Signed 11 July 2016, entered into force August 1, 2017)
* (signed March 8, 2018, entered into force December 30, 2018)
* Canada-United States-Mexico Agreement (Signed November 30, 2018, entered into force July 1, 2020)
Free-trade agreements no longer in force
:Source:
* Canada–U.S. Free Trade Agreement (Signed October 12, 1987, entered into force January 1, 1989, later superseded by NAFTA)
* Trans-Pacific Partnership
The Trans-Pacific Partnership (TPP), or Trans-Pacific Partnership Agreement, was a highly contested proposed trade agreement between 12 Pacific Rim economies, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singa ...
(concluded October 5, 2015, superseded by CPTPP)
* North American Free Trade Agreement
The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
(Entered into force January 1, 1994, later superseded by CUSMA)
* Comprehensive Economic and Trade Agreement
The Comprehensive Economic and Trade Agreement (CETA) is a free-trade agreement between Canada and the European Union and its member states. It has been provisionally applied, thus removing 98% of the preexisting tariffs between the two parts.
...
(concluded August 5, 2014)
Ongoing free-trade agreements negotiations
:Source:
Canada is negotiating bilateral FTAs with the following countries respectively trade blocs:
*Caribbean Community ( CARICOM)
*Guatemala
Guatemala ( ; ), officially the Republic of Guatemala ( es, República de Guatemala, links=no), is a country in Central America. It is bordered to the north and west by Mexico; to the northeast by Belize and the Caribbean; to the east by H ...
, Nicaragua
Nicaragua (; ), officially the Republic of Nicaragua (), is the largest country in Central America, bordered by Honduras to the north, the Caribbean to the east, Costa Rica to the south, and the Pacific Ocean to the west. Managua is the cou ...
and El Salvador
El Salvador (; , meaning " The Saviour"), officially the Republic of El Salvador ( es, República de El Salvador), is a country in Central America. It is bordered on the northeast by Honduras, on the northwest by Guatemala, and on the south b ...
*Dominican Republic
The Dominican Republic ( ; es, República Dominicana, ) is a country located on the island of Hispaniola in the Greater Antilles archipelago of the Caribbean region. It occupies the eastern five-eighths of the island, which it shares wit ...
*India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
*Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
*Morocco
Morocco (),, ) officially the Kingdom of Morocco, is the westernmost country in the Maghreb region of North Africa. It overlooks the Mediterranean Sea to the north and the Atlantic Ocean to the west, and has land borders with Algeria to ...
*Singapore
Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
*Andean Community
The Andean Community ( es, Comunidad Andina, CAN) is a free trade area with the objective of creating a customs union comprising the South American countries of Bolivia, Colombia, Ecuador, and Peru. The trade bloc was called the Andean Pact ...
(FTA's are already in force with Peru and Colombia)
Canada has been involved in negotiations to create the following regional trade blocks:
*Canada and Central American Free Trade Agreement
*Free Trade Area of the Americas
The Free Trade Area of the Americas (FTAA) was a proposed agreement to eliminate or reduce the trade barriers among all countries in the Americas, excluding Cuba. Negotiations to establish the FTAA ended in failure, however, with all parties unab ...
(FTAA)
Political issues
Relations with the U.S.
Canada and the United States share a common trading relationship. Canada's job market continues to perform well along with the US, reaching a 30-year low in the unemployment rate in December 2006, following 14 consecutive years of employment growth.
The United States is by far Canada's largest trading partner, with more than $1.7 billion CAD
Computer-aided design (CAD) is the use of computers (or ) to aid in the creation, modification, analysis, or optimization of a design. This software is used to increase the productivity of the designer, improve the quality of design, improve co ...
in trade per day in 2005. In 2009, 73% of Canada's exports went to the United States, and 63% of Canada's imports were from the United States. Trade with Canada makes up 23% of the United States' exports and 17% of its imports. By comparison, in 2005 this was more than U.S. trade with all countries in the European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
combined, and well over twice U.S. trade with all the countries of Latin America
Latin America or
* french: Amérique Latine, link=no
* ht, Amerik Latin, link=no
* pt, América Latina, link=no, name=a, sometimes referred to as LatAm is a large cultural region in the Americas where Romance languages — languages derived f ...
combined. Just the two-way trade that crosses the Ambassador Bridge
The Ambassador Bridge is a tolled international suspension bridge across the Detroit River that connects Detroit, Michigan, United States, with Windsor, Ontario, Canada. Opened in 1929, it is the busiest international border crossing in North ...
between Michigan
Michigan () is a state in the Great Lakes region of the upper Midwestern United States. With a population of nearly 10.12 million and an area of nearly , Michigan is the 10th-largest state by population, the 11th-largest by area, and the ...
and Ontario
Ontario ( ; ) is one of the thirteen provinces and territories of Canada.Ontario is located in the geographic eastern half of Canada, but it has historically and politically been considered to be part of Central Canada. Located in Central Ca ...
equals all U.S. exports to Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
. Canada's importance to the United States is not just a border-state phenomenon: Canada is the leading export market for 35 of 50 U.S. states, and is the United States' largest foreign supplier of energy.
Bilateral trade increased by 52% between 1989, when the U.S.–Canada Free Trade Agreement (FTA) went into effect, and 1994, when the North American Free Trade Agreement
The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
(NAFTA) superseded it. Trade has since increased by 40%. NAFTA continues the FTA's moves toward reducing trade barriers and establishing agreed-upon trade rules. It also resolves some long-standing bilateral irritants and liberalizes rules in several areas, including agriculture, services, energy, financial services, investment, and government procurement. NAFTA forms the largest trading area in the world, embracing the 405 million people of the three North American countries.
The largest component of U.S.–Canada trade is in the commodity
In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.
The price of a comm ...
sector.
The U.S. is Canada's largest agricultural export market, taking well over half of all Canadian food exports. Nearly two-thirds of Canada's forest products, including pulp
Pulp may refer to:
* Pulp (fruit), the inner flesh of fruit
Engineering
* Dissolving pulp, highly purified cellulose used in fibre and film manufacture
* Pulp (paper), the fibrous material used to make paper
* Molded pulp, a packaging material
...
and paper
Paper is a thin sheet material produced by mechanically or chemically processing cellulose fibres derived from wood, rags, grasses or other vegetable sources in water, draining the water through fine mesh leaving the fibre evenly distributed ...
, are exported to the United States; 72% of Canada's total newsprint
Newsprint is a low-cost, non-archival paper consisting mainly of wood pulp and most commonly used to print newspapers and other publications and advertising material. Invented in 1844 by Charles Fenerty of Nova Scotia, Canada, it usually has an ...
production also is exported to the U.S.
A
$73.6
billion in 2004, U.S.-Canada trade in energy
In physics, energy (from Ancient Greek: ἐνέργεια, ''enérgeia'', “activity”) is the quantitative property that is transferred to a body or to a physical system, recognizable in the performance of work and in the form of heat a ...
is the largest U.S. energy trading relationship, with the overwhelming majority ($66.7 billion) being exports from Canada. The primary components of U.S. energy trade with Canada are petroleum
Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crud ...
, natural gas
Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
, and electricity
Electricity is the set of physical phenomena associated with the presence and motion of matter that has a property of electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described ...
. Canada is the United States' largest oil supplier and the fifth-largest energy producing country in the world. Canada provides about 16% of U.S. oil imports and 14% of total U.S. consumption of natural gas. The United States and Canada's national electricity grids are linked, and both countries share hydropower
Hydropower (from el, ὕδωρ, "water"), also known as water power, is the use of falling or fast-running water to Electricity generation, produce electricity or to power machines. This is achieved by energy transformation, converting the Pot ...
facilities on the western borders.
While most of U.S.-Canada trade flows smoothly, there are occasionally bilateral trade disputes, particularly in the agricultural and cultural fields. Usually these issues are resolved through bilateral consultative forums or referral to World Trade Organization
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and e ...
(WTO) or NAFTA dispute resolution. In May 1999, the U.S. and Canadian governments negotiated an agreement on magazine
A magazine is a periodical publication, generally published on a regular schedule (often weekly or monthly), containing a variety of content. They are generally financed by advertising, purchase price, prepaid subscriptions, or by a combinatio ...
s that provides increased access for the U.S. publishing
Publishing is the activity of making information, literature, music, software and other content available to the public for sale or for free. Traditionally, the term refers to the creation and distribution of printed works, such as books, newsp ...
industry to the Canadian market. The United States and Canada also have resolved several major issues involving fisheries
Fishery can mean either the enterprise of raising or harvesting fish and other aquatic life; or more commonly, the site where such enterprise takes place ( a.k.a. fishing ground). Commercial fisheries include wild fisheries and fish farms, both ...
. By common agreement, the two countries submitted a Gulf of Maine
The Gulf of Maine is a large gulf of the Atlantic Ocean on the east coast of North America. It is bounded by Cape Cod at the eastern tip of Massachusetts in the southwest and by Cape Sable Island at the southern tip of Nova Scotia in the northeast ...
boundary dispute to the International Court of Justice
The International Court of Justice (ICJ; french: Cour internationale de justice, links=no; ), sometimes known as the World Court, is one of the six principal organs of the United Nations (UN). It settles disputes between states in accordanc ...
in 1981; both accepted the court's October 12, 1984 ruling which demarcated the territorial sea boundary. A current issue between the United States and Canada is the ongoing softwood lumber dispute, as the U.S. alleges that Canada unfairly subsidizes its forestry industry.
In 1990, the United States and Canada signed a bilateral Fisheries Enforcement Agreement, which has served to deter illegal fishing
Illegal, unreported and unregulated fishing (IUU) is an issue around the world. Fishing industry observers believe IUU occurs in most fisheries, and accounts for up to 30% of total catches in some important fisheries.
Illegal fishing takes pl ...
activity and reduce the risk of injury during fisheries enforcement incidents. The U.S. and Canada signed a Pacific Salmon
''Oncorhynchus'' is a genus of fish in the family Salmonidae; it contains the Pacific salmon and Pacific trout. The name of the genus is derived from the Greek ὄγκος (ónkos, “lump, bend”) + ῥύγχος (rhúnkhos, “snout”), in r ...
Agreement in June 1999 that settled differences over implementation of the 1985 Pacific Salmon Treaty for the next decade.
Canada and the United States signed an aviation
Aviation includes the activities surrounding mechanical flight and the aircraft industry. ''Aircraft'' includes fixed-wing and rotary-wing types, morphable wings, wing-less lifting bodies, as well as lighter-than-air craft such as hot air ...
agreement during Bill Clinton
William Jefferson Clinton ( né Blythe III; born August 19, 1946) is an American politician who served as the 42nd president of the United States from 1993 to 2001. He previously served as governor of Arkansas from 1979 to 1981 and agai ...
's visit to Canada in February 1995, and air traffic between the two countries has increased dramatically as a result. The two countries also share in operation of the St. Lawrence Seaway, connecting the Great Lakes
The Great Lakes, also called the Great Lakes of North America, are a series of large interconnected freshwater lakes in the mid-east region of North America that connect to the Atlantic Ocean via the Saint Lawrence River. There are five lakes ...
to the Atlantic Ocean
The Atlantic Ocean is the second-largest of the world's five oceans, with an area of about . It covers approximately 20% of Earth's surface and about 29% of its water surface area. It is known to separate the " Old World" of Africa, Europe ...
.
The U.S. remains Canada's largest foreign investor and the most popular destination for Canadian foreign investments. In 2018, the stock of U.S. direct investment in Canada totaled $406 billion, while the stock of Canadian investment in the U.S. totaled $595 billion, or 46% of the overall CDIA stock for 2018. This made Canada the second largest investing country in the U.S. for 2018 US investments are primarily directed at Canada's mining
Mining is the extraction of valuable minerals or other geological materials from the Earth, usually from an ore body, lode, vein, seam, reef, or placer deposit. The exploitation of these deposits for raw material is based on the economic via ...
and smelting
Smelting is a process of applying heat to ore, to extract a base metal. It is a form of extractive metallurgy. It is used to extract many metals from their ores, including silver, iron, copper, and other base metals. Smelting uses heat and a ch ...
industries, petroleum, chemicals, the manufacture of machinery and transportation equipment, and finance, while Canadian investment in the United States is concentrated in manufacturing, wholesale trade, real estate, petroleum, finance, insurance and other services.
Debt
![Canada bonds](https://upload.wikimedia.org/wikipedia/commons/a/a5/Canada_bonds.webp)
Canadian Government Debt
Canadian government debt, also called Canada's public debt, is the liabilities of the government sector. For 2019 (the fiscal year ending 31 March 2020), total financial liabilities or gross debt was $2434 billion for the consolidated Canadian general government (federal, provincial, territorial, and local governments combined). This corresponds to 105.3% as a ratio of GDP (GDP was $2311 billion). Of the $2434 billion, $1146 billion or 47% was federal (central) government liabilities (49.6% as a ratio of GDP). Provincial government liabilities comprise most of the remaining liabilities.
Some critics have raised concerns about the rising cost of servicing the Canadian government debt, saying that, despite historically low interest rates, interest payments on the public debt are expected to increase by 59.4% in 2021.
Household Debt
Household debt
Household debt is the combined debt of all people in a household, including consumer debt and mortgage loans. A significant rise in the level of this debt coincides historically with many severe economic crises and was a cause of the U.S. and su ...
, the amount of money that all adults in the household owe financial institutions, includes consumer debt
In economics, consumer debt is the amount owed by consumers (as opposed to amounts owed by businesses or governments). It includes debts incurred on purchase of goods that are consumable and/or do not appreciate. In macroeconomic terms, it is ...
and mortgage loan
A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any p ...
s. In March 2015, the International Monetary Fund reported that Canada's high household debt was one of two vulnerable domestic areas in Canada's economy; the second is its overheated housing market.
According to Statistics Canada
total household credit
as of July 2019 was CAD$2.2 trillion. According to Philip Cross of the Fraser Institute
The Fraser Institute is a libertarian-conservative Canadian public policy think tank and registered charity. The institute describes itself as independent and non-partisan. It is headquartered in Vancouver, with additional offices in Calgary, T ...
, in May 2015, while the Canadian household debt-to-income ratio is similar to that in the US, however lending standards in Canada are tighter than those in the United States to protect against high-risk borrowers taking out unsustainable debt.[ ]
Mergers and Acquisition
Since 1985, 63,755 deals in- and outbound Canada have been announced, with an overall value of US$3.7 billion. Almost 50% of the targets of Canadian companies (outbound deals) have a parent company in the US. Inbound deals are 82% percent from the US.
Here is a list of the biggest deals in Canadian history:
See also
*Canada's Global Markets Action Plan
The Global Markets Action Plan (GMAP) was Prime Minister Stephen Harper's government strategy to generate employment opportunities for Canadians by expanding Canadian businesses and investment in other countries in a highly competitive global envi ...
* Comparison of Canadian and American economies
*Economy of Alberta
The economy of Alberta is the sum of all economic activity in Alberta, Canada's fourth largest province by population. Alberta's GDP in 2018 was CDN$338.2 billion.
Although Alberta has a presence in many industries such as agriculture, forest ...
*Economy of Ontario
The economy of Ontario is diversified. Ontario is the largest economy in Canada, making up around 38% of Canadian GDP. Though manufacturing plays an important role in Ontario's economy responsible for 12.6% of Ontario's GDP, the service sector ma ...
*Economy of Quebec
The economy of Quebec is diversified and post-industrial with an average potential for growth. Manufacturing and service sectors dominate the economy. If Quebec were a country, its economy would be ranked the 33rd largest in the world just be ...
*Economy of Saskatchewan
The economy of Saskatchewan has been associated with agriculture resulting in the moniker "Bread Basket of Canada"
and Bread Basket of the World. According to the Government of Saskatchewan, approximately 95% of all items produced in Saskatchewa ...
*History of the petroleum industry in Canada
The Canadian petroleum industry arose in parallel with that of the United States. Because of Canada's unique geography, geology, resources and patterns of settlement, however, it developed in different ways. The evolution of the petroleum sector ...
*List of Median household income of cities in Canada
For the analysis of income, Statistics Canada distinguishes between the following statistical units:
*Household: "a person or group of persons who occupy the same dwelling"
*Economic families: "two or more persons who live in the same dwelling and ...
*List of Commonwealth of Nations countries by GDP
List of Commonwealth of Nations countries by GDP may refer to:
* List of Commonwealth of Nations countries by GDP (nominal), a list using the current exchange rates for national currencies
* List of Commonwealth of Nations countries by GDP (PPP) ...
*
Notes
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References
Further reading
* Howlett, Michael and M. Ramesh. ''Political Economy of Canada: An Introduction.'' Toronto: McClelland and Stewart, 1992.
* Wallace, Iain, ''A Geography of the Canadian Economy.'' Don Mills: Oxford University Press, 2002.
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External links
Statistics Canada
Department of Finance Canada
Bank of Canada
Canada - OECD
Canada profile
at the CIA World Factbook
''The World Factbook'', also known as the ''CIA World Factbook'', is a reference resource produced by the Central Intelligence Agency (CIA) with almanac-style information about the countries of the world. The official print version is available ...
Canada profile
at The World Bank
The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Grou ...
Canada Exports and Imports
{{DEFAULTSORT:Economy Of Canada
Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...