The economy of Canada is one of the most developed and significant in the world. According to the most recent World Bank data, the nation’s yearly gross domestic product (GDP) in 2020 was $1.64 trillion in current U.S. dollars. Canada now has the ninth-largest world economy.
The export and import of products and services together account for nearly one-third of Canada’s GDP, demonstrating the country’s economic dependence on international commerce. The United States, China, and the United Kingdom make up the top three trading partners for the nation. Real estate, rental, and leasing are the three most prominent businesses in GDP contribution, followed by manufacturing and mining, quarrying, and oil and gas exploitation.
The leading financial institutions Royal Bank of Canada, Shopify Inc., and Enbridge Inc., an energy distribution and transportation provider, are all based in Canada.
Before bouncing back in the year’s second half, the COVID-19 epidemic led Canada’s GDP to decline significantly in the first half of 2020. Real GDP decreased by 11.3% quarter-over-quarter (Q/Q) in the second quarter of 2020, but it increased by 9.1% Q/Q in the third and 2.2% Q/Q in the fourth, balancing the substantial loss in the first half of the year.
First-quarter 2021 real GDP increased 0.3% above first-quarter 2020 real GDP. Low mortgage rates, a boost in housing demand, and transfers from the government to individuals and businesses all contributed to the first-quarter GDP growth.
As of September 9, 2021, the CAD/USD exchange rate utilized in this story is 0.787149. As of 2020, Canada’s economy ranked ninth in the world, with a USD 1.64 trillion GDP. A significant portion of Canada’s economy is made up of exports and imports, which together account for nearly one-third of GDP. Canada’s top trading partners are China, the United Kingdom, and the United States. Mining, manufacturing, and real estate are Canada’s three main industries.
Property, Renting, and Leasing
The real estate, rental, and leasing sector in Canada consist of businesses that carry out the following kinds of tasks:
- Managing real estate
- Buying, renting or selling real estate on behalf of others
- Appraising real estate
- Renting and leasing tangible assets like automobiles
- Leasing nonfinancial intangible assets like copyrighted works
According to the Government of Canada, the sector’s GDP increased by 3.7% for the year ending in June 2021 and employs over 250,000 people.
Manufacturing
The manufacturing sector in Canada is involved in the physical or chemical repurposing of raw materials or substances into new goods. These items may either be final commodities for consumption or semi-finished goods to be employed in industrial operations
Industries in Canada produce various goods, including food, chemicals, petroleum, manufactured metals, machinery, and transportable. According to the Government of Canada, the sector’s GDP increased 8.1% for the year ending in June 2021 and employs about 1.5 million people.
ATS Automation Tooling Systems, a maker of industrial automated production systems and a custom engineer, Ballard Power Systems Inc., a producer of hydrogen fuel cells, and NFI Group Inc., a producer of heavy-duty transit buses, are some notable Canadian producers.
Quarrying, Oil and Gas Extraction, and Mining
The primary activity of Canada’s mining, quarrying, and oil and gas extraction sector is the extraction of naturally available minerals. Oil and gas extraction dominates the industry, although additional mining activities include coal mining and the extraction of various metals, including gold, silver, copper, nickel, and more. The sector also includes mining and quarrying for potash and stone, sand, gravel, clay, and ceramic materials.
Among the most significant mining firms in Canada include Teck Resources Ltd., a natural resource business that mines for zinc, copper, molybdenum, gold, and metallurgical coal, Nutrien Ltd., a producer and distributor of potash, nitrogen, and phosphate products, and Barrick Gold Corp.
Top Trading Partners for Canada
The deficit in Canada’s goods and services trade in May 2021 was CAD$1.8 billion ($1.41). A total of CAD50.9 billion ($40.13 billion) in imports were made. According to the Government of Canada, exports, gross fixed capital creation, and inventories each makeup around a third of Canada’s GDP. According to the total number of products and services exported and imported in 2020, the U.S., China, and the U.K. were the nation’s top three trade partners.
1. The U.S. is a trading partner. Canada’s trade balance was in overall surplus in July 2021, coming in at CAD$0.78 billion ($0.61). The total value of exported products was $53.7 billion (US$42.32). The total value of services exported was $56.3 billion, while services were imported for CAD$53 billion ($41.77).
According to the Observatory of Economic Complexity, Canada’s main product export to the United States in May 2021 was crude oil, while its top goods import from the United States was automobiles. The United States-Mexico-Canada Agreement (USMCA), which went into effect on July 1, 2020, regulates Canada’s commercial ties with the United States and Mexico.
Essential clauses are included in the agreement on labor, intellectual property, autos, dairy and agriculture, and other sectors. The USMCA superseded the North American Free Commercial Agreement (NAFTA), which had controlled trade ties between the three nations since 1994.
2. China is another trading partner. In 2020, Canada had a sizable BOT deficit with China. The entire value of products exported from Canada to China was $31.6 billion ($23.6), while the total value of goods imported was $51.9 billion ($38.7), creating a trade imbalance.
According to Statistics Canada, the entire value of services exported in 2019 was $6.1 billion, while the total value of services imported was $2.5 billion, creating a services trade surplus with China. Coal was the principal export from Canada to China in 2020. Computers were the most common Chinese import for it.
3. The UK is also a trading partner. In 2020, Canada had a BOT surplus with the U.K. With $14.9 billion in total products exported and $5.85 billion in authentic goods imported, Canada’s trade in goods with the U.K. was in surplus. According to Statistics Canada, the total value of services exported was $1.4 billion, while the full value of services imported was $1.8 billion, resulting in a small trade deficit with the United Kingdom.
In 2020, coins, pearls, precious stones, and precious metals were Canada’s leading exports to the United Kingdom. Machinery, nuclear reactors, and boilers were the major imports from the U.K.
On April 1, 2021, the Canada-United Kingdom Trade Continuity Agreement (Canada-UK TCA) went into force. The primary advantages of Canada’s trade accords with the E.U., as detailed in the Canada-European Union Comprehensive Economic and Trade Agreement, are preserved by the Canada-UK TCA following Brexit, the U.K.’s withdrawal from the European Union (E.U.).
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What Is the Size of the Canadian Economy?
Canada’s economy was the ninth-largest as of the year 2020. The United States, China, Japan, Germany, the United Kingdom, India, France, and Italy were the only nations having economies greater than Canada.
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Can Canada Surpass American Wealth?
The U.S., which has the most outstanding economy in the world as of 2020, has a considerably larger economy than Canada, even though Canada does have one of the largest economies in the world. The GDP of the United States was $21 trillion, whereas that of Canada was $1.6 trillion.
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What Makes Canada So Rich?
Due to its robust and diverse economy, Canada is a prosperous country. Natural resources that are widely used across the world, such as gold, zinc, copper, and nickel, constitute a significant contributor to its economy. Canada is an essential player in the oil industry with several giant oil corporations. Along with an extensive real estate market, the nation boasts a sizable banking sector with several banks and other financial organizations.
To curb four-decade-high inflation, the Bank of Canada has increased its benchmark policy rate by more than two percentage points since March. On September 8, it is anticipated to increase it by at least another half-point.
The second quarter’s growth rate was even more significant than the central bank’s earlier this month predicted 4% annualized pace and indicates an acceleration from the first quarter’s 3.1% growth rate, which will further reinforce the notion that the economy needs higher interest rates.
Canada has profited from high oil, grain, and natural gas prices, while increased energy costs have severely impacted the world economy. The high first-half performance reflects the advantages of early reopenings this year, following severe Covid-related lockdowns last winter. Canada’s GDP grew more quickly in the first half of this year than any other G-7 country. The American economy, on the other hand, shrank in both quarters.
Overall, in conclusion, one of the largest economies in the world and a significant influence on international commerce, Canada is a highly developed country. Real estate, mining, and manufacturing make up its three main economic sectors, and some of the biggest mining companies in the world call it home. The U.S., China, and the U.K. are its top trading partners, and trade accounts for a sizable amount of its GDP.
Economy growth of Canada in the coming future
Strong commodity demand worldwide will help Canada’s economy flourish. During the COVID-19 epidemic, commodity prices surged and are anticipated to stay high for the majority of 2022. However, a decline is beginning to emerge with a slowdown in China’s industrial growth. Demand will be further moderated by a switch in consumer expenditure from goods to services.
Early 2022 is anticipated to see continued high oil prices. Prices are anticipated to drop significantly and revert to levels similar to those experienced prior to the pandemic after the northern hemisphere winter is complete and as a result of the constant but steady rise in supply by producing countries.
The COVID-19 situation has essentially been resolved for Canada’s economy. The domestic demand is increasing now that the containment restrictions have been relaxed. As a result of the market for commodities and the shocks to global GDP, exports are anticipated to expand. Canada is protected from broader economic effects by its few trade links to nations that have been severely impacted by the conflict in Ukraine and revenue from high resource prices.It is predicted that real GDP will increase by 3.8% in 2022 and 2.6% in 2023. As output rises slightly over potential, unemployment will stay low. This year, price increases will remain strong due to global supply issues, exacerbating current inflationary pressures.
