Canada’s Economy: News, Trends and Forecast

Canada’s Economy: News, Trends and Forecast

Canada economy news 2021 

The Canadian economy contracted by 5.4 per cent in 2020 – worse than its neighbour, the United States, which saw a 3.7 per cent reduction.1 Its economic growth forecast for 2021 is 3.5 per cent, and the government has significant influence over which industries will benefit most from their recovery plan.2

Canada is the second biggest country by land area and has the 10th largest economy in the world.3 Nevertheless, the economic impact of the COVID-19 pandemic has been severe.4

The North American country is the fifth largest producer of natural gas and the sixth largest producer of oil in the world.5 The oil and gas industry produces 26 per cent of the total carbon dioxide (CO2) emissions6, and it helps make Canada the world’s 11th highest CO2 emitter.7 Canada cannot maintain its image as a climate champion while clinging to outdated fossil fuels. The federal and provincial governments need to stop subsidising environmentally harmful energy sources and instead focus on cleaner alternatives.

Can Canada’s economy recover without compromising its climate change commitments?

In rebuilding Canada’s economy, the government has a unique opportunity. They could choose to reduce funding for operations, such as Alberta oil sands, which is responsible for producing over 80 per cent of Canada’s crude oil.8 Greater support could be given to renewable energy technologies to promote green growth instead.9 Not only would this align with Canada’s net zero commitments under the Paris Climate Agreement, it would also position the country to take advantage of the forecast prosperity in the clean energy sector.10

Renewable energy accounted for 3 per cent of national GDP and employed about 300,000 people in 2017.11 It currently provides over 16 per cent of Canada’s energy supply12 and has shown greater resilience to the economic downturn than oil and gas.13 For example, in the first half of 2020, Canada’s production of petroleum and other liquids declined 20 per cent from its 2019 average, due to low global crude oil prices and changes in global demand.14 In contrast, renewables were the only energy source forecast to experience a growth in demand throughout 2020.15 They are anticipated to contribute 3.4 per cent of Canada’s GDP per year over the next decade.16

Electric vehicles (EVs) is one area where Canada has a clear competitive advantage.17 The government could exploit this to both create more jobs and reduce their carbon emissions.18 EV use could be encouraged at home and production could be ramped up to make Canada a global supplier.19 Transportation currently causes about 25 per cent of Canada’s greenhouse gas emissions and so transitioning to EVs is critical for reaching net zero targets.20 Building the necessary infrastructure for EVs would provide construction and manufacturing work,21 while EV manufacturing would offer additional high skilled jobs.22

What does the future hold for Canada’s economic recovery?

Depending on how the Canadian government chooses to act, the future could be bright for Canadians. Predictions state that clean energy will employ over 550,000 people by 2030.23 These new jobs will more than compensate for the 50,000 jobs that will be lost in fossil fuels during the same period.24 As the government prepares to invest billions in economic recovery from COVID-19, it is crucial that this money is not wasted on carbon-intensive industries.25 Instead, a green economic recovery should be favoured to maximise employment opportunities for Canadians and attract international investors who will see the country as a true climate change challenger with a clear roadmap for economic growth.26  

For another article on the potential governments have for environmental recovery, please click here.

Canada's Economy: News, Trends and Forecast

Sources

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  2. Oecd.org. (2019). Canada Economic Snapshot – OECD. [online] Available at: http://www.oecd.org/economy/canada-economic-snapshot/.
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  5. CAPP. (2019). Canada’s Economic Contribution | Canada Natural Resources & GDP. [online] Available at: https://www.capp.ca/economy/canadian-economic-contribution/.
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  8. Leahy, S. (2019). This is the world’s most destructive oil operation—and it’s growing. [online] Nationalgeographic.com. Available at: https://www.nationalgeographic.com/environment/2019/04/alberta-canadas-tar-sands-is-growing-but-indigenous-people-fight-back/.
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  10. Mishra, A. (n.d.). Leading Experts Weigh In On Growing Canada’s Economy In 2021. [online] Forbes. Available at: https://www.forbes.com/sites/ankitmishra/2021/01/08/leading-experts-weigh-in-on-growing-canadas-economy-in-2021/?sh=5fa77e4525e8.
  11. New research claims green energy creates more jobs than the traditional kind: Don Pittis | CBC News. (n.d.). CBC. [online] Available at: https://www.cbc.ca/news/business/green-energy-economy-1.5143757.
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  14. www.eia.gov. (n.d.). Canada’s oil production drops to its lowest level since 2016 wildfires – Today in Energy – U.S. Energy Information Administration (EIA). [online] Available at: https://www.eia.gov/todayinenergy/detail.php?id=44396.
  15. Mishra, A. (n.d.). Canada’s Clean Energy Sector Can Help Drive Economic Recovery From COVID-19. [online] Forbes. Available at: https://www.forbes.com/sites/ankitmishra/2020/06/08/canadas-clean-energy-sector-can-help-drive-economic-recovery-from-covid-19/?sh=3cfa1c9a21bd [Accessed 11 Jan. 2021].
  16. Mishra, A. (n.d.). Canada’s Clean Energy Sector Can Help Drive Economic Recovery From COVID-19. [online] Forbes. Available at: https://www.forbes.com/sites/ankitmishra/2020/06/08/canadas-clean-energy-sector-can-help-drive-economic-recovery-from-covid-19/?sh=3cfa1c9a21bd [Accessed 11 Jan. 2021].
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