Canada’s Economic Growth

Canada’s Economic Growth

According to the news article by the Business Development Bank of Canada, Canada is likely to experience economic growth despite the uncertainty that surrounds the global economy (BDC, 2020). Therefore this paper outlines a descriptive analysis of the Canadian economy while basing the arguments on a macroeconomic perspective. The potential growth of Canada’s economy can be explained using macroeconomic principles by focusing on the specific ways in which Canada’s economy functions concerning the government’s strategic decisions that are meant to improve the nation’s living standards and the overall societal well-being. And the contemporary roles of the government revolve around the beneficiaries of the policies. These beneficiaries include global trading partners, citizens, and the federal system. While utilizing macroeconomics, this analysis will primarily focus on the employment levels of Canada, the price stability, and the overall economic growth. What is more, the macroeconomic performance will rely on the economic variables at the national level, especially in 2020 (Killins, 2020).

In 2020, the economic performance of Canada might go up, given the extensive development in the real estate market, growth in the total number of residential investments, and the growth of the average household consumption rate. Despite the existence of some challenges that led to the economic slowdown of 2019, the current conditions mean that Canada might see a 1.7 percent economic development rate in 2020 (BDC, 2020). Due to the development in Canada’s real estate sector, there have been extensive employment opportunities. The level of employment is directly related to inflation. To be more precise, since their growths in residential investments have to lead to more employment opportunities, it means that unemployment will go down as most workers will get some income. After that, the citizens with new revenue will want to spend their money. However, since the market has not adjusted sufficiently to this change, it means there will be more money and fewer products. Consequently, the retailer will raise its product prices to maximize the increasing consumer demand. And this explains the economic growth in Canada.

The economy of Canada is gradually growing. As a result, the debt ratio by the end of 2019 was 87.5% down from 90% the year of 2018. What is more, dare ration is estimated to go down to 85% in 2020 (BDC, 2020). Canada ended 2019 with a deficit of ten billion US dollars, which was slightly under the predicted outcome. However, the total revenue in Canada has gone up with over five percent. The increase in Canada’s revenue is due to the extensive recovery in oil prices. What is more, the government of the United lifted the metal tariffs and the stability in the housing industry.  Despite the slight growth in the overall economy, there are potential challenges that are facing the economic progress of Canada.  That is fluctuation in the international commodity prices. Secondly, the prevalent trade and policy disputes that exist between China and the United States of America; lastly, is the fear of the potential of hard Brexit, which could have severe economic impacts.

Changes in the trading patterns of the United States will affect the effect the economy of Canada since it is the leading trade partner of Canada.  That is, the later is the leading trading partner of Canada and accounts for 75% of all the products that Canada exports and fifty percent of all the imports that go into the Canadian economy (BDC, 2020). Despite the trade agreement between the United States, Mexico, and Canada, Trudeau’s signed the on the need to renegotiate some of the policies of the contract. As a result, and this caused a decrease in business by about four percent in 2019; consequently, there was a 2% percent inflation in the Canadian economy by the end of 2019 (which was the bank of Canada’s primary target).  And the inflation is expected to remain on that level in 2020 through to 2021.

That aside, there is a substantial social disparity in Canada. However, the social well-being of all the citizens has improved due to the slight reduction in the price of oil and other petroleum products. What is more, the cost of internet access services has reduced in 2020 and is expected to be affordable for most Canadian citizens in most parts of the year 2020 to 2021. That aside, affordable telephone services and educational tuition fees are also considered as the primary factors that have helped regulate inflation. On the other hand, vehicle insurance, an increase in mortgage interest, and expensive automobile products have pushed inflation up. All in the Canadian economy has been able to thrive in an economy where most nations around the globe have seen a decrease in their economic performance. From the macroeconomic perspective, trade between Canada and its international partners serve a more critical role than the simple exchange of products and services.

More specifically, international trade partners like the United States foster the availability of a wide range of products and services. As a result, foreign trade promotes specialization with regards to the total exports from Canada to the international market. What is more, the influential international trade also fosters the exchange and sustainability of foreign currencies; for instance, when the international partners pay for the export products from Canada with foreign currency.  That aside, the sector of Agriculture accounts for a wide range of employment opportunities in Canada. The country is one of the largest producers of wheat all over the globe. Secondly, the nation accounts for ten percent of the global genetically modified yields. Also, Canada is a worldwide leader in the production of various minerals, such as Zinc and Uranium. Additionally, it produces large amounts of gas and has one of the largest oil reserves all over the globe, primarily located in Alberta.

The manufacturing and industrial sector of Canada supports 25% of the nation’s gross domestic product, thus employs a quarter of the whole labor force (BDC, 2020). The high performance in the industrial sector is due to the structural framework that is divided into various sections. That is, the prevalent renewable energy that is produced from the wind; also, hydrogen production, fishing, and power are primary contributors to Canada’s high productivity. Despite all that, oil prices are expected to stay low. Despite the new transmission capacities that were installed in the Alberta and Saskatchewan oil economies, the current state of the global economy has indicated that the overall demand for oil has a high potential of reducing extensively, thus exerting downward pressure on the oil prices.

The most important indicator of the growth in the Canadian economy is the state of households in Canada. Due to the prior downturn in the real estate sector between 2018 and 2019, there was a slow down in household productivity. What is more, the rising interest rates and the restrictive policies that were implemented in Ontario and British Columbia were also core contributors to the previous economic downturn (BDC, 2020). However, the household sector indicates high potential development since many citizens have adapted to these economic changes. What is more, the growth in household investment is due to the availability of a strong labor market. Despite the slight increase in Canada’s economy, more jobs have been created between the beginning and the end of 2019; as a result, unemployment rates are historically low in most provinces all over Canada.