Macroeconomics Report: Analysis of the Canadian Economy 2017-2018

This report provides an analysis of the Canadian economy, focusing on key economic indicators between 2017 and 2018. It examines the GDP growth rate, which showed a slowdown, and the Bank of Canada's policy rate changes, including an interest rate increase in October 2018. The report assesses the inflation rate, which initially met the target but saw fluctuations, and the unemployment rate, which experienced some increases. Additionally, it discusses tax changes, such as pensionable earning tax reduction and proposed corporate tax cuts. The report also addresses the Canadian government's budgetary deficit, noting its decrease compared to the previous years. The analysis is supported by references to economic data sources and provides insights into the factors influencing the Canadian economy during the specified period.

Macroeconomics
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Canadian Economy 1
According to Trading Economics statistics, the Canadian GDP Growth rate dropped
between July 2018 (0.5% to 0.1% in January 2019 hence an indication of slowed economic
growth. Worth noting, the Canadian bank has made policy rate changes in the year 2018.
Specifically, the Canadian Bank increased its interest policy rate overnight rate to one and three-
quarter percent in the month of October. In my view, this was crucial to boost investment and
foster economic activity growth. The Canadian Bank inflation target for the year 2018 was set at
one to three percent(Bank of Canada, 2018). The fact that the Canadian inflation rate was
reported to be at 2% in the year 2018 justifies the target rate.
Notably, the Canadian inflation rate rose between the months of April but rose in the
month of July from 2.2 % to 2.5 %. Worth noting, July experienced the highest inflationary
levels in the year 2018 at 3%. The fact that the inflation levels fell after the target rate was
introduced means the target was effective at the time. Specifically, the year 2018 introduced
pensionable earning tax reduction of 0.04% for a pension. In my view, this is good for the
economy because there will be more disposable income for investments by pensioners Also,
there is a proposal to reduce tax for small corporate businesses which will increase profit
margins and encourage expansion of businesses and investment hence growing the economy.
The Canadian unemployment rate in the year 2018 rose between the months April to
June, July, and August. There was a drop in Canadian labor participation rate in the months
January to April and October to December 2018. However, the rate of unemployment picked up
in 2019.This goes to show the Canadian economy needs to create and encourage employment
opportunities through financial and tax incentives.

Canadian Economy 2
(Trading Economics,2019).Retrieved from
https://tradingeconomics.com/canada/unemployment-rate
Worth noting the Canadian budget is experiencing a budgetary deficit estimated to be 0.9 %
of the country’s gross domestic product for the year 2017. Noteworthy, the Canadian budget
between the year 2016 and 2017 was in surplus. However, there was a budgetary deficit between
the year 2017-18(Trading Economic,2019). The budget deficit has lowered between the year
2017 and 2019. Overall, the Canadian government investment should increase and expenditure
reduced to curb the deficit.

Canadian Economy 3
(Trading Economics,2019).Retrieved from https://tradingeconomics.com/canada/government-
budget

Canadian Economy 4
References
Bank of Canada. (2018).Monetary Policy Report. Retrieved from
https://www.bankofcanada.ca/wp-content/uploads/2018/10/mpr-2018-10-24.pdf
Reuters. (2019). UPDATE 1-Canada annual inflation rate edges up to 1.5 pct in February.
Retrieved from https://www.reuters.com/article/canada-economy-inflation/update-1-
canada-annual-inflation-rate-edges-up-to-15-pct-in-february-idUSL1N21907Z