Country Report: Canada

Chapter 1: Country presentation Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west and northward into the Arctic Ocean. It is the world's second largest country by total area. Canada's common border with the United States to the south and northwest is the longest in the world. The land that is now Canada was inhabited for millennia by various groups of Aboriginal peoples. Beginning in the late 15th century, British and French expeditions explored, and later settled, along the Atlantic coast. France ceded nearly all of its colonies in North America in 1763 after the Seven Years' War. In 1867, with the union of three British North American colonies through Confederation, Canada was formed as a federal dominion of four provinces. This began an accretion of provinces and territories and a process of increasing autonomy from the United Kingdom. This widening autonomy was highlighted by the Statute of Westminster of 1931 and culminated in the Canada Act of 1982, which severed the vestiges of legal dependence on the British parliament. Canada is a federal state that is governed as a parliamentary democracy and a constitutional monarchy with Queen Elizabeth II as its head of state. It is a bilingual nation with both English and French as official languages at the federal level. One of the world's highly developed countries, Canada has a diversified economy that is reliant upon its abundant natural resources and upon tradeparticularly with the United States, with which Canada has had a long and complex relationship. It is a member of the G7, G8, G20, NATO, OECD, WTO, Commonwealth, Francophonie, OAS, APEC, and UN. With the eighthhighest Human Development Index globally, it has one of the highest standards of living in the world. Canada has the ninth largest economy in the world, is one of the world's wealthiest nations, and is a member of the Organization for Economic Co-operation and Development (OECD) and Group of Eight (G8). As with other developed nations, the Canadian economy is dominated by the service industry, which employs about three quarters of Canadians. Canada is unusual among developed countries in the importance of the primary sector, with the logging and oil industries being two of Canada's most important. Canada also has a sizable manufacturing sector, centered in Central Canada, with the automobile industry especially important.

Canada has one of the highest levels of economic freedom in the world. Today Canada closely resembles the U.S. in its market-oriented economic system, and pattern of production. As of December 2010, Canada's national unemployment rate stood at 7.6% as the economy continues its recovery from the effects of the 2007-2010 global financial crisis. In May 2010, provincial unemployment rates varied from a low of 5.0% in Saskatchewan to a high of 13.8% in Newfoundland and Labrador. According to the Forbes Global 2000 list of the world's largest companies in 2008, Canada had 69 companies in the list, ranking 5th next to France. As of 2008, Canadas total government debt burden is the lowest in the G8. International trade makes up a large part of the Canadian economy, particularly of its natural resources. In 2009, agricultural, energy, forestry and mining 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 approximately 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. Canada has considerable natural resources spread across its varied regions. As an example, in British Columbia the forestry industry is of great importance, while the oil and gas industry is important in Alberta, Saskatchewan and Newfoundland and Labrador. Northern Ontario is home to a wide array of mines, while the fishing industry has long been central to the character of the Atlantic provinces, though it has recently been in steep decline. Canada has mineral resources of coal, copper, iron ore, and gold. These primary industries are increasingly becoming less important to the overall economy. Only some 4% of Canadians are employed in these 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, nickel, uranium, diamonds and lead. Several of Canada's largest companies are based in natural resource industries, such as EnCana, Cameco, Goldcorp, and Barrick Gold. 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 sector, which is directly linked to the logging industry. The large 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. Such 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. 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 and expansion activities overseas where prices are lower and governments more accommodating. Canadian companies are increasingly playing important roles in Latin America, Southeast Asia, and Africa. The exploitation of renewable resources have raised concerns in recent years. After decades of escalating overexploitation the cod fishery all but collapsed in the 1990s, and the Pacific salmon industry also suffered greatly. The logging industry, after many years of activism, has in recent years moved to a more sustainable model. The Canadian economy differs greatly from region to region. Traditionally Central Canada has been the economic engine of Canada, home to more than half of its population and much of its industry. Recent years have seen rapid growth in Western Canada as trade with Asia has enriched British Columbia and oil wealth provided a major boost to Alberta and Saskatchewan. The four Atlantic provinces, though once the centre of economic activity, underwent a major decline in the late 19th century and have traditionally been significantly poorer than the rest of Canada, especially after the recent collapse of the fishing industry. Recent years have seen some significant moves towards diversification, especially as offshore oil and gas wealth have begun to flow into the region. Quebec has also traditionally been poorer than the Canadian average although by a lesser margin than the Atlantic provinces. In more recent years Newfoundland and Labrador have started to see a change in their economy, being called the "Celtic tiger of Canada," (in a comparison to the economic transformation in Ireland); it has also been called a "mini Alberta" because of new oil and gas exploration. While many Newfoundlanders and Labradorians still emigrate to Alberta for higher-paying jobs, the province's population has been on the rise in recent years with many people deciding to move back home.

Chapter 3 Canada is considered among the leading industrial nations by its extremely low population density and vast wealth of natural resource, being the second largest land mass in the world after Russia and a population of 34 million. 3.1 Evolution of inflation rate Inflation rate refers to a general rise in prices for goods and services against a standard level of purchasing power. Among the most important indicators of inflations are: CPI which measures the consumer prices and GDP deflator, which measures inflation in the whole of the domestic economy. The below table shows the evolution of the inflation rate, from 2005 to 20011:

Prices

Unit

200 5 2.2

200 6 2.0

200 7 2.1

200 8 2.4

200 9 0.3

201 0 1.8

201 1 2.3

Inflation rate: all items Inflation rate: all items non food non energy Inflation rate: food Inflation rate: energy

Annual growth %

Annual growth%

1.2

1.5

2.1

1.0

Annual growth% Annual growth%

2.3

2.3

2.6

3.9

9.7

5.2

2.3

9.8

Source:http://www.oecd-ilibrary.org/economics/country-statistical-profile-canada_20752288table-can

Forecasts for the inflation rate in Canada for the incoming years: Canada 200 6 2.8 200 7 2.2 200 8 0.5 200 9 -2.5 201 0 3.1 201 1 2.5 201 2 2.4 201 3 2.5 201 4 2.6 2015

Real GDP growth Inflation

2.7

2.0

2.1

2.4

0.3

1.8

2.3

2.0

2.2

2.3

2.3

Source: Economist Intelligence Unit

Currently, in 2011, Canadas inflation rate reached 2.2% in the 12 month to February, following to 2.3% increase in January. The increase in the inflation rate is recorded due to the increase in energy prices (10.6%) and gasoline prices increase rising to 15.7% in 12 the months to January. On a year over year basis, prices increased in the major components of the CPI in the 12 months to February. Consumers paid 4% more in passenger vehicle insurance premiums and they also paid more for air transportation but less for the purcharse of passenger vehicles. Regarding food purchases, these increase 2% in February and the food prices went up 2.1% in the 12 month to February, similar to the increase in January. Higher prices were noticeable in child care, internet access and domestic services. For the health and personal care, the prices rose 2% in February; consumers paid more for dental care and non-prescribed medicines. In what concerns the clothing and footwear, prices declined 2% in February, consumers being able to pay less for womens and childrens clothing.

The largest increase happened in the transportation, where the prices increased 5.2% in 1 year to February. The financial sector of Canada is strong, leading households to be able to benefit from very low interest rates, with the result that house purchases have arisen. 3.2 Use of labor force GDP composition by sector: agriculture: 2.3% industry: 26.4% services: 71.3% (2008 est.)

Labor force - by occupation: agriculture: 2% manufacturing: 13% construction: 6% services: 76% other: 3% (2006 est.)

3.3 Unemployment rate The below table shows the evolution of the unemployment rate and an IMF(International Monetray Fund) forecast:

Unemployment is a difficult experience for many Canadians. In addition to the loss of work and income, unemployment can bring varying hardships for individuals and their families. The unemployment rate in 2009 was 8.3%. This was an increase of 2.2 percentage points over the 2008 rate of 6.1%. The 2009 unemployment rate was the highest rate of unemployment in the last decade. In 2009, the unemployment rate was 9.4% for men and 7.0% for women. By age group in 2009, the unemployment rate ranged from 15.3% for youth aged 15 to 24, to 4.3% for individuals 65 years of age and over. In 2006, the unemployment rate among some groups of the Canadian population was significantly higher than the Canadian average which at that time was 6.3%. For example, the rate was 12.3% for recent immigrant and 14.8% for aboriginal people. The unemployment rate varied from 15.5% in Newfoundland and Labrador to 4.8% in Saskatchewan in 2009. The unemployment rate in Canada was reported as 8.28% of total labor force in 2009, according to IMF when Canadas economy share of world total GDP, adjusted by Purchasing Power Parity was 1.85%. Currently, Canadas unemployment decreased 0.1% points to 7.7% in March. Over the lay year employment has risen by 1.8%. Overall employment has not changed in March, as gains in full-time work were offset by declines in part-time(91,000 increase of full-time employment and 92,000 declined of part-time employment). The full-time increase brought gains to +1.8% in full-time employment over the last year and part time to 1.7%. The sectors in discussion are accommodation and food services as well as construction, and losses in health care and social assistance and in public administration. In the majority of provinces there were no notable changes in overall employment, but declines in Quebec and increases in Prince Edward Island. Employment increased for men aged 25 and over, while it declined among youths aged 15 to 24 and women 55 and over.

3.4 The social harmony (social peace) Canadas economy is in a high stage of development and knows diversifications. The foundation is represented by foreign trade and its nations largest trade partner is Canada. Foreign trade represents 45% of the nations gross domestic product. Poverty in Canada is spread within some segments of society. The elements that contribute to reducing poverty in Canada are: Canadas strong economic growth, government transfers to persons, universal medical and public educations systems, minimum wage laws in every province and territory of Canada. The poverty declined after 1996, where the groups with higher low income were single-parent mothers, mentally ill, physically handicapped, recent immigrant and students.

The basic need poverty measure is a poverty threshold measure based on various sources (Statistics Canadas databases) to determine the costs of household necessities such as personal care, food, shelter, health care transportation etc. for the provinces across Canada and taken into account the family sizes establishes how many households afford those necessities. It is also based on reported income and can be subject to error due to unreported employment. The measure has dropped noticeably over the past 50 years and in 2004 represents 4.9% , 1.6 million Canadians. Chapter 4: Balance of payments Offers data and information on the external sector of the economy. It starts with a short presentation of the current account of the balance of payments in the two referenced years and of the magnitude and dynamics of the main inbalances observed. The foreign trade in goods and services is analysed by taking into account the absolute and relative value of exports and imports, exports/capita, structure of exports and imports by main merchandise groups and by main partner countries. The inflows and outflows of invested capital as well the level and dynamics of the external debt and external debt service are also presented. Where data are available, the origin and destination of these financial flows are also wellcommed.

Canada - Macroeconomic Data

2008 Real Gross Domestic Product (GDP) (Can$ billions) Real GDP Growth Rate (%) Inflation Rate (from GDP Price Deflator) (%) Exchange Rate US Dollars (Can$/$) 1,415.84 -2.6100 -2.1120 1.143

2009 1,459.72 3.099 3.096 1.168

Romania - Macroeconomic Data

2008 Real Gross Domestic Product (GDP) ($ billions) Real GDP Growth Rate (%) Inflation Rate (from GDP Price Deflator) (%) Exchange Rate US Dollars (L/$) 165.372 -7.1340 2.791 3.049

2009 162.963 -1.9390 6.194 3.209

Current account of the balance of payments

Balance of payments

Romania 2008 2009 -4,5 -5,9 -0,3 -1,8 3,5 0,5 -4,0

Canada 2008 644,56 3 489,99 5 72,113 57,378 -43,523 2009 502,673 369,529 67,144 61,430 -49,976

Current Account Goods balance Services balance Income balance Current transfers balance Capital Account External deficit

-11,6 -13,6 0,5 -2,7 4,3 0,4 -11,1

Financial Account FDI Portfolio investments Other capital investments Official reserves Financial account without official reserves Errors and omissions Gross capital formation Gross savings External debt International investment position

12,6 6,7 -0,4 6,3 0,1 12,6 -1,5 31,3 18,6 51,8 -49,4

5,2 3,8 0,4 2,0 -1,1 6,2 -1,2 25,1 20,8 67,9 48,798

Balance of payments (imports-exports) Canada

2008 8,018,170,239

2009 -38,379,665,052

Romania

-23,719,000,000

-7,298,000,000

Foreign trade in goods and services is analysed by taking into account the absolute and relative value of exports and imports, exports/capita, structure of exports and imports by main merchandise groups and by main partner countries.

Exports of goods and services 2008 share 100.0 73.0 9.4 2.4 15.2 % growth over 2007 5.2 3.8 3.1 16.5 12.1

Imports of goods and services 2008 share 100.0 62.3 11.7 2.7 23.3 % growth over 2007 6.3 4.6 6.8 -6.5 13.0

Goods and Services Balance 2008 24,651 74,735 -9,536 -943 -39,605

2008 World U.S. EU Japan R.O.W 557,92 2 407,12 9 52,689 13,294 84,810

2008 533,27 1 332,39 5 62,224 14,237 124,41

Exports of goods and services 2008 share 73.7 26.3 100.0 % growth over 2007 91.0 75.1 86.3

Imports of goods and services 2008 share 64.2 35.8 100.0 % growth over 2007 71.6 59.6 68.0

Goods and Services Balance 2008 -16,073.5 -7,442.2 -23,515.7

2008 IntraEU ExtraEU Total Trade 23,746. 6 9,960.0 33,724. 6

2008 39,838. 1 17,402. 2 57,240. 3

Foreign direct investment, net outflows (% of GDP)

2008 Canada 5.48

2009 3.02

Romania

0.14

0.14

Foreign direct investment, net (BoP, current US$)

2008 Canada Romania 26,288,380,000.00 13,606,000,000.00

2009 20,452,670,000.00 6,086,000,000.00

Foreign direct investment, net inflows (BoP, current US$)

2008 Canada Romania 55,932,740,000.00 13,883,000,000.00

2009 19,898,170,000.00 6,310,000,000.00

Foreign direct investment, net inflows (% of GDP)

2008 Canada Romania 3.73 6.94

2009 1.49 3.92

External debt and external debt service

CANADA

Year 2008 2009

Debt - external $758,600,000,000 $762,200,000,000

Rank 13 15

Percent Change 10.79 % 0.47 %

Date of Information 30 June 2007 31 December 2008

This entry gives the total public and private debt owed to nonresidents repayable in foreign currency, goods, or services. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms.

ROMANIA

Year 2008 2009

Debt - external $74,540,000,000 $101,600,000,000

Rank 38 37

Percent Change 74.32 % 36.30 %

Date of Information 31 December 2007 31 December 2008

References:
http://www.statcan.gc.ca/daily-quotidien/110228/t110228b2-eng.htm http://www.traderom.ro/infobusiness/Romania%20Infobusiness%202010%2020apr10.pdf http://www.indexmundi.com/facts/canada/foreign-direct-investment http://www.indexmundi.com/facts/romania/foreign-direct-investment
Snider, Bradley. 2005. Constant Dollar Adjustment of Expenditure Data from the Survey of Household Spending. Statistics Canada Catalogue no. 62F0026MIE, no. 005. Ottawa. Household Expenditures Research Paper series. 28 p. (accessed Aug 7, 2007).

http://www.statcan.gc.ca/pub/75-001-x/2007109/article/10351-eng.htm#Statistics http://tradingeconomics.com/economics/inflation-cpi.aspx?symbol=cad http://findarticles.com/p/articles/mi_m1094/is_4_36/ai_80924114/pg_6/? tag=content;col1 http://www.oecd-ilibrary.org/economics/country-statistical-profile-canada_20752288table-can