Canada's Economy: Components, Role of International Trade, Effects of NAFTA Termination, and Impact on Provinces

This article discusses the components of Canada's real GDP, the role of international trade, effects of NAFTA termination, and the impact on provinces. It covers the major industries that contribute to Canada's economy and how international trade agreements affect them. It also explores the potential consequences of the termination of NAFTA and which provinces will be most and least affected. The article includes references to support the information provided.

Running Head: CANADA ECONOMY 0
Canada’s Economy

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Table of Contents
Components of Canada's real GDP............................................................................................2
Role of International Trade........................................................................................................2
Effects of termination of NAFTA..............................................................................................4
Provinces that will be most affected.......................................................................................4
Provinces that will be least affected.......................................................................................4
References..................................................................................................................................6

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Components of Canada's real GDP
The economy of Canada is a category of the mixed economy and secured the position
of the 10th largest GDP by nominal and the 17th largest GDP by PPP in the world. In the first
quarter, the gross domestic product of Canada grew by 0.3 % following by an increase of
0.4% in the subsequent quarters. The major reason for the increase in GDP is due to growth
moderation by a declaration in the household spending, the exports of the energy products
were ultimately low and the investments sector saw a decrease by 1.9% (CBC news, 2017).
Somewhere in the range of 2007 and 2014, yield in both the land and rental and
renting division, and the oil and gas segment, developed at a normal yearly rate of over 2% as
compared to the other nations in the similar segment (Pub, 2017).
Somewhere in the range of 2000 and 2014, the expansion balanced estimation of
goods and products delivered in Canada – or Canada's genuine total national output (GDP) –
developed at a normal yearly rate of 2.0%, the most elevated among the G7 nations (CBC
news, 2017). In 2015, the development rate in Canada's genuine GDP was 1.2%, which was
fourth-most accelerating among the G7 nations. Rising vitality costs contributed drastically to
Canada's genuine GDP development somewhere in the range of 2000 and 2014 by expanding
livelihoods and speculative deals. The slower rate of development in 2015 was expected to
decreases in product costs (Canadian press 2017).
Role of International Trade
The agreements of the trade replace the state-to-state determination of disputes
regarding the trade, for example, between Canada and the US over softwood lumber. In the
agreements between countries, the bigger nation, for the most part, charges better in a
political setting where control wins. In words of Hart’s, it is not easy to consider trade

CANADA ECONOMY 3
exchange between nations, since it is people and organizations that really change the
guidelines according to the situations even though set by governments (Abedi, 2018).
"Exchange understandings do minimal more than lessen the degree for discretionary and
unfair directions and for ineffective impedance in advertise based choices. Trade agreements
allow firms to plan decisions for the long-term basis to locate production and distribution
with more certainty (Fraiser Institute, 2016).
Canada's fares majorly rules by the oil and, mining and horticultural items. Together,
these three ventures represented 74.1% of fares in 2015 and over half (58.7%) of all fare
related occupations. Their more noteworthy offer of wage than of employment mirrors the
abnormal state of efficiency in sending out situated enterprises (Pub, 2017).
(Source: Financial Post, 2017)
From the above graph it can be observed that the GDP of the Canada grew by 0.06% driven
by the various numbers of sectors and influenced by the manufacturing factors. Yet the
earnings of the January continue to follow the trend. The main reason behind this is due to the
slump in the prices of the oil.

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Effects of termination of NAFTA
Its investigation says genuine stock fares decreased by $8.9 billion or 1.8 for every
per cent when the NAFTA terminates, with the biggest effect on engine vehicle and parts
send out, which would dive by about $6 billion. Venture could decrease the facility in the
longer duration, as the fall of NAFTA would damage Canada's capacity to attract investments
in light of secured markets of the U.S. Additionally influencing long-term monetary
development, the investigation includes opportunity loss that would proceed into the next
year if NAFTA somehow managed to end, prompting all-out activity misfortunes of 91,000
(Fraiser Institute, 2016).
Provinces that will be most affected
There are the sectors such as the food and agricultural industry. As the exports are hit
by the tariffs, therefore, the frozen vegetables will be affected and the business may lose out
the position (Abedi. 2018). On the other hand in Ontario, the manufacturing industry wills
suffer the difficulties and due to a report, the auto industry will be affected due to higher rates
and taxes.
Provinces that will be least affected
The geographic location which opens the gate to the Asian markets will not be
affected due to the termination of the NAFTA. Under the US economies the Alberta’s oil and
gas exports are heavily linked with each other. The impact of the provincial economy is
restricted (Canadian press 2017). Quebec and Manitoba both are processed having a low
share and also possess the vulnerable manufacturing sectors and hence they would not be
affected much as the rates are little higher yet the products can compensate with the
economy.

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References
Abedi. M. (2018). These provinces will be most (and least) hurt if NAFTA is terminated:
report. Retrieved from https://globalnews.ca/news/4087122/nafta-termination-canada-
provinces-effect-moodys/
Canadian press (2017). Canadian economy grows at 3 percent in 2017, the fastest pace in 6
years. Retrieved from https://globalnews.ca/news/4058301/canada-q4-2017-gdp-
growth/
CBC news, (2017). Canada tops G7 in latest IMF estimate for 2017 economic growth, No. 2
in 2018. Retrieved from https://www.cbc.ca/news/business/imf-canada-economy-g7-
1.4347737
Financial Post, (2017) We have liftoff’: Canada's surging January GDP growth has some
economists raising 2017 forecasts. Retrieved from
https://business.financialpost.com/news/economy/canadas-economy-beats-
expectations-signalling-it-might-be-a-better-year-than-many-thought
Fraiser Institute, (2016). The Importance of International Trade to the Canadian Economy:
An Overview. Retrieved from https://www.fraserinstitute.org/studies/the-importance-
of-international-trade-to-the-canadian-economy-an-overview
Pub., L. (2017). Economic Indicators: A Graphical Look at Canada’s Economy. Retrieved
from https://hillnotes.ca/2016/06/17/economic-indicators-a-graphical-look-at-
canadas-economy/