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Unit of currency: Canadian dollar (C$). Exchange rate C$1.44 US$1
(20 September 1996). The C$, at parity with the US$ until 1976, fell to
C$1.43 : US$1 in February 1986, then began a modest recovery, remaining
generally strong in the late 80s and early 90s; but since depreciating.
Concern over the country's large public sector deficit and the accumulation
of debt has affected the currency since1993-4.
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Overview: Over the past century, Canada has transformed its economy.
Until the early 20thC it was a predominantly agricultural nation and after
World War 2 a quarter of the working population was still engaged in agriculture.
Today Canada is a highly industrialised nation, with manufacturing contributing
nearly 19% of GDP, as against 3% from agriculture, forestry and fishing.
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Like other mature economics, Canada has developed its service industries.
Finance, insurance and real estate represent 17% of GDP, distributive trades
12%, government services 6% and other services 23%. Tourism has become
a leading industry. Ontario is the centre of economic activity and the
province with the largest manufacturing base and agricultural sector. It
accounts for 40% of GDP. Toronto, Ontario, is the country's leading financial
and services centre.
Canada is exceptionally well endowed with natural resources: minerals,
petroleum and natural gas, forests, coastal waters for fishing, and rivers
and falls permitting hydroelectric power. Foreign trade has long been a
significant economic activity. While industrial exports predominate today,
exports of agricultural, fish and forest products continue to play a significant
part.
Canada's economic identity has a strongly regional flavour, and economic
ties with the US have been strengthened by the North American Free Trade
Association (NAFTA), which Mexico has also joined. Economic ties with Britain
and Europe have declined.
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GNP: Canada is a high income country with GNP per capita of US$19,570
(1994). Real annual GNP per capita growth averaged 0.4% during 1985-94.
Total GNP was US$569,949m in 1994. Economic activity was buoyant in the
1980s, with real GDP growth peaking at 6.3% in 1984, but the economy went
into recession during the early 1990s. After negative growth in 1990 and
1991, there were two years of modest recovery, followed by stronger growth
of 4.6% in 1994. In 1995, GDP growth was 2.2%.
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Inflation: Consumer price inflation was 12.5% in 1981, then remained
at just above 4% throughout the rest of the 1980s; however, it rose again
to 6.8% in January 1991, when the Goods and Services Tax (GST) was introduced.
Since then it has fallen and remained low, running at 1.5% in mid-1996.
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Investment: Canada's external assets amounted to C$239bn at the
end of 1992, some 41% in the form of direct investment abroad and 27% as
private holdings of foreign stocks, bonds and deposits. Foreign direct
investment in Canada amounted to C$137bn at the end of 1992. In 1985 the
government liberalised investment regulations. The US accounted for about
80% of foreign ownership of Canadian manufacturing companies in the early
1990s, followed by Britain with about 14%. Asia -Pacific investment is
increasing.
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Trade: Canada is the world's seventh largest exporter and importer.
Its main trading partner is the US and the trade flow between Canada and
the US is the largest in the world between any two countries. There are
strong intra-industry links between, in particular, the motor and aircraft
industries in both countries. Many US corporations operate subsidiaries
in Canada. The Free Trade Agreement (FTA) of 1989 cemented the close economic
ties between the two countries and was subsequently enlarged to include
Mexico by the North American Free Trade Agreement, which created the largest
trading area in the world. Canada's other major trading partners are Japan,
Britain, Germany and China. Total foreign trade in 1995 was: exports CS$263.7bn,
imports C$225.5bn. The trade balance was US$38.2bn. Chief exports in 1995
were automobile products, machinery and equipment, industrial products,
forest products, energy products, agricultural and fish products. Chief
imports were machines and equipment, automobile products, industrial goods,
consumer goods. and agricultural and fish products.
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Currency restrictions: None.
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Regional affiliations: Member of the North American Free Trade Association.
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Agriculture: Agriculture accounts for only 3% of GDP but remains
an important source of export earnings. 280,043 census farms (those that
produce agricultural products intended for sale) were recorded in 199 1,
down 4.5% from 1986. However, the number of larger farms grew during 1986-9
1, from 1 1 0,000 to 1 1 8,000. Government intervention is extensive, and
more than half of all farm revenue passes through various marketing boards
and schemes, most notably that of wheat and dairy producers. About 75%
of Canada's high-quality wheat is exported. Government subsidies for grain
transportation are to end.
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Manitoba, Saskatchewan and Alberta contain 82% of the farmland: the
prairie grain seas. In 1994, 22m tons of wheat were produced and 7.1 m
tons of oilseed rape (known as canola). The prairies also support a large
beef cattle industry, worth C$12,430m in 1994. In the Atlantic provinces,
mixed farming (both grain and livestock) is most common. Forage crops predominate
in Ontario, while the lush Niagara peninsula produces most of Canada's
fruit and grapes. In Quebec, more than half the commercial farms are dairy
farms; this province is also the world's largest producer of maple syrup.
Only 2% of land in British Columbia is used for agriculture; predominantly
dairy and livestock farming. However, the Okanagan Valley in this province
is Canada's largest producer of apples. The north has an estimated 1.3m
ha. of potentially arable land and large expanses of grazing land, but
only 140 farms (1991).
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Fisheries: Canada is the world's largest exporter of fish. In 1994
Canadian production of fish products amounted to more than C$3.2bn, of
which more than 80% was exported. In recent years more than 40,000 jobs
have been lost as a result of reductions in fishing quotas agreed in 1993
to preserve stocks. In December 1993 all but one of the major cod fisheries
on the Atlantic coast were closed, though there were indications by 1996
that cod stocks were recovering. There was conflict between the Canadian
government and the EU in 1995 over quotas and fishing practices, triggered
by Spanish trawlers fishing just outside the Canadian 200-mile limit.
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Forestry: Canada is the world's largest exporter of timber, pulp
and newsprint, and produces 40% of the world's newsprint. 65% of forests
are classified as productive. British Columbia, Quebec and Ontario account
for 80% of output. In 1992, 56 million cu m of sawn timber was produced,
23m tons of wood pulp and 9m tons of newsprint.
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Manufacturing: Manufacturing and process industries include steel
and smelting, textiles, leather, non-metallic minerals, paper and board,
and fabricated metals (all of which slumped in the 1990/92 recession, but
have since shown recovery). Refined petroleum, coal products, tobacco,
food products, printing and publishing have been growth industries. Chemicals,
wood products and plastic products are also important. Motor production
stood at over 2m units in 1993. Manufacture of aluminium in 1992 was 1.9m
tonnes, up from 1.8m tonnes the previous year; while steel production increased
to 13.8m tonnes in 1992 from 12.9m tonnes in 1991. The trend in manufacture
is towards higher value-added products.
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Mining: Canada is the world's leading producer of zinc (est. 940,000
tons in 1994) and uranium (est. 11,000kg in 1994) and a major producer
of nickel, asbestos, potash, copper, lead and iron ore. It is the world's
largest exporter of potash. Large reserves of nickel, copper and cobalt
were recently discovered in Labrador. Canadian exploration expenditures
totalled an estimated C$420m in 1992, down from C$775m in 1990. Non-metal
production also includes sulphur and salt. On a per capita basis, Canada
is the world's largest consumer of salt, which is used on icy roads.
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Tourism: Tourism contributes around C$25bn p.a. More than two-thirds,
however, comes from internal travel by Canadians. Around 78% of foreign
visitors to Canada came from the US in 1994, contributing C$6.7bn of revenue.
However, Canadians travelling abroad spent C$16.4bn in 1993.
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Energy: The inhabitants of this cold country consume more energy
per capita than any other industrialised country, but Canada has extensive
natural resources of oil, gas, coal and uranium, providing trade surpluses
for all fuels. It has 25-year proven reserves of natural gas and nine years
of oil. 22 nuclear power plants are in operation. Hydropower provides two-thirds
of electricity and over 30% of domestic energy requirements. Churchill
Falls, Labrador (1,230mw), is the largest hydroelectric complex in the
world, and new hydroelectric projects are planned. Nearly 50bn kwh of electricity
was exported to the US in 1994.