Economy of Canada

KEY FACTS 2015

GNI: US$1,704.2 billion

GNI p.c.: US$47,540

GDP growth: 1.1% p.a. 2011–15

Inflation: 1.1% p.a. 2011–15

Canada is among the largest economies in the world (ranking 15th in 2014, in terms of GDP). Until the early 20th century, Canada had a predominantly agricultural economy. Even after World War II, a quarter of the workforce was still engaged in agriculture. Today, it is highly industrialised with one of the world’s highest per capita income rates. Ontario is the centre of economic activity and the province with the largest manufacturing base and agricultural sector. Toronto is the leading financial and services centre. The country is exceptionally well endowed with natural resources: minerals, petroleum and natural gas, forests, extensive coastal waters for fishing, and rivers and falls for hydroelectric power.

Canada is among the world’s leading exporters of potash, uranium, nickel, zinc and asbestos and a major producer of aluminium, cadmium, cobalt, copper, gold and, in the 2000s, diamonds. There are large reserves of nickel, copper and cobalt, as well as oil and gas – proven reserves of oil were estimated in January 2014 to be 174 billion barrels, and of gas, two trillion cubic metres.

Economic links with its giant neighbour were cemented by the Free Trade Agreement of 1989. This was subsequently enlarged to include Mexico under the North American Free Trade Agreement (NAFTA).

Both federal and provincial governments have undertaken privatisation in order to reduce their fiscal deficits. There are limits to the level of foreign ownership permitted in areas such as broadcasting, telecommunications, transportation and uranium mining.

The country has one of the world’s most open economies. It enjoyed strong growth from the mid-1990s, mainly in exports and the services sector, and growth in manufacturing output averaged around three per cent p.a. during the decade.

Good economic growth continued into the 2000s until 2008 when investment and exports collapsed in the world economic downturn and the economy went sharply into recession. Despite the government’s taking strong measures to stimulate the economy, recession persisted into 2009, with an overall decline of 2.7 per cent in that year, but recovering well in 2010 (3.4 per cent), and steady in 2011 (2.5 per cent), 2012 (1.7 per cent) and 2013 (1.7 per cent). The unemployment rate, which had fallen below six per cent in 2007 – its lowest level for over three decades – averaged 8.3 per cent in 2009 and only fell below 7 per cent in September 2014.