Canada - Overview
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After having contracted during the global recession, the growth of Canada's GDP rebounded. However, due to a weak US demand, the crisis of the Euro-zone and the high level of household debts, the economic growth of Canada experienced a slowdown and it was around 1.5% in 2013. This year, Canada profited from a rebound in the gas and oil sectors. The growth pace was irregular with a remarkable decrease in June 2013. The very weak level of inflation contributed to hide the problem of household debts. Private investments were also irregular in 2013. The Canadian government is trying to sign an agreement for transporting oil sands through a pipeline into the US refineries, without any results yet.
In 2013, the Canadian government's goals were to create jobs, to keep a low tax rate and to maintain a tight control on public expenses. The objective of bringing the budget back to balance by 2015 was considered realistic in October 2013 when the deficit had been reduced by 25%. Priority is given to growth and long-term prosperity. The budget reform plan of 2012-2013 included a series of budget cuts in public services, health-care, environment, public development aid, defense and investments in research and development. In mid-term, Canada should improve its business environment in order to make up for its decline in its competitiveness. Another worrisome subject is the aging of its population, which increases the cost of medical care and the domestic household debts. In 2013, these debts were reduced thanks to the tightening of rules for real estate loans, before they started to increase again. The central bank has kept a very low key interest rate (1%) due to a gloomy economic situation. Canada's performance highly depends on the economic revival of the United States and the Euro-zone. In 2013, a reform of employment insurance was established, covering most of all the seasonal workers of the eastern side of the country. A freeze on employment insurance premiums for three years, starting in 2014, has also been announced. The signing of a free-trade agreement with the European Union is also being negotiated, which could help to sustain the economy.
Canada is a rich country which enjoys a very good living standard. Unemployment had increased after the recession, but it has become stable in 2013 (about 7%). However, the country must face an increase in income inequality and a rise in the number of conflicts in the workplace. Lastly, the exploitation of oil sands has a terrible environmental impact which could thwart the goals of reducing greenhouse gases.
The services sector account for almost two-thirds of the country's GDP and it dominates the Canadian economy. The most dynamic sectors are: telecommunications, tourism, Internet (the majority of households use the Internet on a regular basis) and the aeronautical industry.
The agricultural sector represents nearly 2% of the GDP and employs 2.4% of the population. However, the agricultural system and the food-processing industry employ almost two million persons and contribute to 8% of the national wealth. Canada is one of the largest exporters of agricultural products in the world, wheat in particular. It produces 10% of the world's GMO harvests. Fishing is an important sector. Canada is one of the main producers of minerals, mainly nickel, zinc and uranium. The country also has large reserves of oil (3rd largest reserve in the world) and natural gas.
Canada has 6 strong sectors of primary industry: renewable energies (mainly wind), forestry sector, hydrogen and fuel cells, mines, metals and minerals, fishing, oil and gas. The manufacturing sector represents approximately one-third of the GDP.
Foreign trade overview
Canada is a country open to foreign trade which represents more than 60 % of its GDP.
The United States receives about 80% of Canadian exports. As a fact, Canada is the largest supplier of energy to the United States, including oil, gas, uranium and electric power. Its other main trading partners are the European Union, Japan, China and Mexico. It is important to note that in 2013 Canada began negotiations with the European Union in order to sign a free-trade agreement.
As an effect of the global economic crisis, the Canadian trade balance turned negative, since exports were falling faster than imports and they began to recover at a slower pace. This negative balance has remained in 2012 due to a cautious revival from the United States and the difficulties of the Euro-zone. The situation was similar in 2013, but the trade deficit is much smaller. Imports and exports increased in 2013, but exports progressed at a faster rate.
After having declined in 2009-2010, the inflows of FDI in Canada increased again in 2011-2012. The Canadian economy is considered to be more stable than other large western economies. In 2013, FDI continued to make progress, according to the data available in November, they had an increase of 44% in relation to 2012.
According to the UNCTAD World Investment Report 2013, the country ranks 10th in terms of FDI inflows. Canada has an attractive business environment. It ranks 19 out of 189 countries in the classification Doing Business 2014 issued by the World Bank. However, it went down two places in relation to the previous year.