September 09, 2010
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Home > Overseas Market Situation > Canada
India Trade Promotion Organisation
Economic and Commercial REport 2004-2005
KEY ECONOMIC INDICA TORS
Canada is a member of high-income OECD countries, and has a gross national income of $ 956.9 billion (2005 figure). Standard of living of its population, as measured by the per capita income, was $28930 in 2005 however, in terms of purchasing power party,it was higher at $32,741.The growth rate of GDP was 2.2% in 2005 as againest 1.8% in 2003. The unemployment rate was 7.5% 2005.The Canadian economy has delivered solid performance for nearly a decade with increased esilience to economic shocks, demonstrating the benefits of a well-designed macroeconomic framework and the pay off from a range of structural reforms mplemented since the late 1980 Solid fiscal management has produced a long-term budget surplus, which is substantially reducing the national debt, althou public debate continues over how to manage the rising cost of the publicly funded ealthcare system.
STRUCTURE OF THE ECONOMY
More than two-thirds of he country's output is contributed by the Services sector, which employs nearly hree-quarters of the working population. In contrast, rimary sectors accounted or less than3.5% of Canada's GDP in 2005and provided employment for just over 3% of the country's workforce.But the primary sector plays an mportant role in Canada's economic activity, as 4th of Canada exports are primary articles and many areas depend on the primary sector as their source of income. The main agricultural products are wheat, barley, oilseed, tobacco, fruits, egetables, dairy products, forest products and fish.As regards the anufacturing sector, Canada enjoys a large industrial base, which produces 26% f he ~:country's output. The manufacturing sector improved its competitiveness uring the 19905 and has been; one of the most buoyant sectors of the economy. anufacturing together with construction generates employment to 1/5 of the opulation. Canada's close trading ties with the US has helped manufacturing ector o grow further. The main industries are transportation equipment, chemicals, processed and unprocessed minerals, food products; wood and paper products; fish products, petroleum and natural gas. Since late 2000, however, manufacturing ector has been feeling the impact of weaker US demand growth. One of the emarkable features of Canadian economy is the growth made by it since the ecession of the early 19905. Canada is estimated to havegrown more rapidly than ts other developed counterparts, which was a combined effort of controlled nflation rate, low interest rates, and a low Canadian dollar (with respect to other ajor currencies), all of which helped exports to grow. The mining, communications,utilities, trade, and financial services sectors grew the most in output, while mployment growth was greatest in nongovernmental services-
FOREIGN TRADE
Trade accounts for roughly a third of GDP. Canada has signed two agreements ith US- 1989 Canada Free Trade Agreement (FTA) and the 1994 North American ree ade greem (NAFTA) (which includes Mexico), which has brought a trade oom for anada. The relations which Canada enjoys with US, is a major defining actor for anada's dramatic increase in trade. The Iand Canada have the world's argest rading relationship and US absorbs more than 85% of Cananada main export include motor vehicles and parts, industrial machinery, aircraft,telecommunications equipment; chemicals,plastics, fertilizers;wood pulp,timber,crude petroleum,natural gas, electricity and aluminum.And machinery and equipment, motor vehicles and parts, crude il,chemicals, electricity, durable consumer goods are Canada's main mports.However, some problematic issues often relating to the issues fsubsidiescontinues to thrive between the US and Canada. American moves,which mpact on Canadian exports -in the form of tariffs on Canadiantimberand increasedsubsidies for US farmers - have created particular tension.
CHALLENGES FACING CANADA

Despite being an affluent, high-tech industrial society, there are some issues, which can't be overlooked in the current scenario. As a result of globalization, Canadian enterprises are oing to face even stronger competition from rivals in emerging economies in coming years. espite some calls from business for a lower dollar or for government inducements to keep roduction in Canada, the most appropriate response is for domestic policy makers to redouble their focus on enhancing productivity growth and innovation in high and low echnology sectors alike. Globalization of competition, technological advances, and changesin the demographic structure of the workforce continue are three threats to the abour markets in Canada. Also, to maintain steady improvements in living standards, espiteincreases in the old age dependency ratio and to ensure that public finances across alllevels of government remain sustainable in the long term, especially given the upward ressures on publicly financed health care outlays, remain important challenges for the overnment of Canada.
Indo-Canada Relations
The foundation of India-Canada economic relation rests on the economic assistance given Canada to India in 1951 through the Canadian International Development Agency (CIDA). India was at one time the largest recipient of aid from Canada. However aid figures have progressively gone down over the years as the India-Canada relationship has transformed into one based on trade, rather than assistance. With the beginning of economic reform by ndia in July 1991, Canada began to expand its economic presence in markets other than in he USA. The financial crisis in South East Asian countries in 1997 also contributed to anada's change in focus from South East Asia to south Asia and it identified India as the argest market in the South Asian region with enormous scope for business collaboration. ollowing India's nuclear tests of May 1998 and Canada's opposition to it, the two countries relations were put on hold for sometime. Notwithstanding this political onfrontation, trade continued to grow between the two countries. In the last two years herehave been a record number of bilateral visits at the political as well as the official levels ccording to the recent figures on India's foreign trade partners, Canada accounts for 1.2% f India's total exports and 0.9% of imports. Indian exports to Canada have increased from C$ 280 million in 1992 to C$ 1326 million in 2004(January to November) a five-fold increase. Canadian exports to India have marginally increased from C$ 529 million in 1992 o C$ 658 million in 2005(January to November). Bilateral trade between the two ountries accelerated to C$2.45 billion in 200<,"The trade balance has been in India's avour ever since 1993. In Rupee terms, India's total exports't"o Canada were Rs 3507 rore ($1,423 million) in 20c4and imports from Canada amounted to Rs 3336 crore. India xports readymade garments, textiles, cotton yarn, carpets, floor spreads, gem & jewellery precious stones, organic chemicals, coffee, spices, light engineering goods, iron & steel rticles, footwear and leather products, rice, cereals, processed foods and marine products o Canada. India's major items of import from Canada include newsprint, wood pulp, sbestos, potash, peas, iron scrap, copper, minerals and industrial chemicals. India is anada's largest trading partner in South Asia, but is ranked as Canada's 18th largest exportmarket There is a room for improvement in the trade between the two countries as ndia's share in Canada's imports is not even 0.5%. With the removal of the overseas nvestment ceiling of US $100 million, rapid increase in FDI in Canada by Indian software anufacturers has been seen. Since 2001, Indian flagship companies have expanded their perations in Canada with several setting up software development centres.The two sides also agreed to enhance people to people links through improved visa and consular services; strengthen health research co-operation.The Asia-Paasific Foundation of Canada (APFC) has completed several major trade studies and is fostering new ways to deepen commercial and economic relationship between India and Canada. Several bilateral business organizations, such as the Canada-India Business Council and the Indo-Canada Chamber of Commerce are also working towards boosting economic and trade ties between the two nations.
In his recent visit to Chennai in India on April 8, 2005, Canadian Internaional Trade Minister Jim Peterson officially opened the new Canadian consulate there. This is expected to provide fillip to trade between Canada and southern India.
 
   

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