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Why does Canada have the best economy

Why does Canada have the best economy?

When discussing the world’s strongest economies, Canada certainly makes the list!

In general, Canada has the best economy since it is extremely well-rounded. Its strong infrastructure, well-educated workforce, and advantageous geographic location further substantiate its impressive economic stability.

Additionally, Canada was among the best-performing economies during the 2008 financial crisis further displaying the resilient nature of its economy. 

As of 2022, the country had the world’s eighth-largest economy with a nominal GDP of approximately US$2.221 trillion. It is also one of the world’s largest trading nations, with a highly globalised economy.

So, other than this, what’s more that stands behind Canada’s economic competence, and why is it considered among the finest? Read on as that’s what we’ll explore in our comprehensive and detailed examination of Canada’s economic vigour. 

Canada boasts a vast array of core sectors

Rich Natural Resources

Rich Natural Resources

Canada is enriched with an abundance of natural resources, which play a significant role in shaping its economy. The natural resources sector is an essential pillar of the nation’s core sectors, providing jobs, driving exports, and contributing to the GDP. 

Insights on key resources encompass:

MiningCanada is one of the top five producers of 13 important minerals and metals worldwide.The country is the world’s largest producer of potash and ranks in the top five for cobalt, graphite, and aluminium.
ForestryThe forestry sector contributes over $24.6 billion to Canada’s GDP.The third-largest forest area in the world is found in Canada.
EnergyCanada is the sixth-largest energy producer worldwide.The energy sector accounts for almost 10% of the nation’s GDP.

These natural resources underpin a broad spectrum of industries and generate extensive employment, exports, and revenue.

With responsible and sustainable resource management, Canada’s resource-rich landscape presents a strong foundation for continued economic growth.

Thriving Manufacturing Industry

Thriving Manufacturing Industry

The manufacturing sector is a critical component of Canada’s economy. It represents a diverse array of industries that contribute to the nation’s economic growth, job creation, and exports. 

From automobiles and aerospace, to information and communications technology (ICT), this vibrant and innovative sector is the backbone of the Canadian industrial landscape

AutomotiveThis industry contributes $19 billion to the GDP of Canada.Canada is home to major auto manufacturers such as Honda, Ford, and Toyota.
AerospaceThe aerospace sector accounts for over $25 billion in GDP.The country is a leader in civil air navigation systems and small gas turbine engines.

Robust Services Sector

Robust Services Sector

The services sector is the largest component of Canada’s economy, accounting for over 70% of the nation’s GDP. This sector encompasses a wide array of subsectors, including finance, real estate, education, health, retail, and more. 

It also provides employment to a vast number of Canadians and drives the nation’s economic growth and prosperity.

FinanceFinancial services account for over 7% of Canada’s GDPThe country’s banking system is ranked as the safest globally.
Real EstateReal estate contributes around 12.5% to the economy.Real estate and construction have been crucial to Canada’s GDP growth in recent years.

Canada’s economy has strong trade partnerships

Canada’s economy, as one of the wealthiest in the world, involves a significant amount of international trade. 

The country’s strategic position in North America, as well as its wealth in natural resources, and diversified economy place it among the top trading nations globally. 

Canada’s trade relationships span multiple continents, with the United States, China, and United Kingdom as primary partners.

RankTrading PartnerExports (%)Imports (%)
1United States73.2544.84
3United Kingdom3.835.52

The US greatly aids Canada’s economy

The US greatly aids Canada's economy

The United States stands as Canada’s primary trading partner, with bilateral trade totalling approximately $459.9 billion in 2022

The close geographic proximity, similar economic standards, and the comprehensive trading agreement (USMCA, formerly NAFTA) have fortified this trade relationship. Key exports to the US include motor vehicles and parts, petroleum oils, and crude oil.

China diversifies and strengthens Canada’s economy

China diversifies and strengthens Canada's economy

China is Canada’s second-largest trading partner. Although far smaller in volume compared to the United States, trade with China has been growing. 

In 2022, the bilateral trade between Canada and China is totalling approximately $21.9 billion. Key Canadian exports to China include oil seeds (mainly canola), pulp and waste paper, and wood pulp.

The UK bolsters Canada’s economic stability

The UK bolsters Canada's economic stability

The United Kingdom is one of Canada’s top trading partners in Europe, even more so since Brexit and the Global Britain initiative. As of 2022, the UK was Canada’s third-largest single-country trading partner. 

With the Canada-UK Trade Continuity Agreement, the two countries have ensured continued preferential access to each other’s markets, which was previously granted under CETA.

Innovation and technology drive Canada’s economy

Innovation and technology drive Canada's economy

The Canadian government plays a pivotal role in the country’s innovation ecosystem. It provides funding, resources, and policy support to help businesses and individuals excel in the rapidly evolving technological landscape.

Various programs, such as the Industrial Research Assistance Program (IRAP) and the National Research Council, are designed to empower entrepreneurs and small-to-medium-sized businesses with financial assistance.

The country has also experienced significant growth in its technology industries. This includes information and communications technology (ICT), clean technology, and artificial intelligence. 

Many corporations and startups have chosen Canada to expand their operations because of its conducive business environment, skilled workforce, and government support. 

Notably, Amazon, Microsoft, Shopify, and Uber, among others, have made considerable investments in the country.

Canada boasts low unemployment rates

Canada boasts low unemployment rates

Canada’s job market also plays an integral role in the country’s strong and buoyant economy. Recently, there has been notable job growth within the country.

According to Statistics Canada, the country saw an increase of 337,000 jobs in February 2022 due to gains in part-time work. This helped surpass estimates and recover job losses that stemmed from the pandemic.

An essential aspect of the job market is the nation’s low unemployment rate. As of February 2022, the unemployment rate fell to 5.5% from 6.5% in the prior month, representing an 8.6% decrease.

This decrease suggests that more people are finding employment opportunities, which leads to a healthier economy. The lower unemployment rate also signifies improved consumer confidence and spending power, leading to increased economic stimulus.

Below is a snapshot of the Canadian job market figures for February 2022 from Statistics Canada:

IndicatorFebruary 2022Change from previous month
Number of jobs19,121,600+337,000
Unemployment rate5.5%-1.0%
Participation rate65.4%+0.4%

Canada’s economy grows due to its pro-immigrant policies

Canada's economy grows due to its pro-immigrant policies

Canada’s well-regulated immigration policies and programs allow for attracting top global talent, supporting its robust economy. 

Programs like the Express Entry system and the Global Talent Stream ensure a consistent flow of skilled immigrants capable of thriving in various labour market needs. 

By facilitating the entry of international skilled workers, the country bolsters its human capital, which, in turn, nurtures economic growth.

Our Final Thoughts

Our Final Thoughts

In conclusion, the strength and resilience of the Canadian economy are exhibited in several key aspects. 

At the heart of Canada’s economy lie its core sectors, including natural resources, manufacturing, and the services sector that collectively power its exceptional financial standing.

Key Economic FactorsIndicator
Core SectorsNatural Resources, Manufacturing, Services sector
Global TradeTop partners: United States, China, United Kingdom
Innovation & TechnologySignificant investments and advancements
Job Market & Employment RateConsistent job growth, low unemployment rates
Immigration PolicyOpen immigration policy fuelling economic growth

Another crucial aspect of Canada’s robust economy is its international trading relationship. Advancements in innovation and technology have also significantly fuelled the country’s economy. 

Furthermore, the Canadian job market and the country’s open immigration policy significantly contribute to the robustness of the economy. 

All these elements harmonise to form a comprehensive picture of a resilient and thriving economy, making Canada one amongst the strongest economies globally.

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