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Economic Cooperation

 

Economic Cooperation

The Canadian economy enjoyed excellent growth over 2017 and 2018. At the close of 2017, the country had registered a growth rate of 3%, unusual for a developed country. Also, in 2018 unemployment reached its lowest rate in forty years.

For 2019, analysts are predicting a positive trend, even though the Bank of Canada (BoC) lowered its predictions in its latest report on monetary policy, published January 9th of this year. Latest estimates forecast a growth rate of 1.7% instead of the 2.1% predicted in October of last year.

Among the factors that led the BoC to review its estimates were the uncertainty on the international scene: trade friction between the US and China and the upcoming exit of the United Kingdom from the European Union, as well as the consistent decline in the price of crude, particularly important to an oil-exporting country such as Canada.

Inflation remains within the 2% goal limit of the BoC (which predicts a further drop to 1.5% in the third trimester); it has also chosen to keep overnight interest rates steady at 1.75% after increases in July and October of last year. The Bank will monitor this decision closely, given the possible risks for the mortgage market and considering the current high level of household debt (currently at 175%), particularly in areas (such as Vancouver and Toronto) where real estate market imbalances could persist or increase.

For the moment however Ottawa’s position remains strong. Between the fourth trimester of 2017 and the third trimester of 2018 (most recent data available) exports rose by 5.2% and imports by 5.8% compared to the same period last year.

Canada’s economy is very open to international trade (approximately one third of its GDP comes from exports.) While on one hand this makes for robust growth, it can also increase the risk of exposure to instability.

This year will be an important one for Canada’s economy. In addition to the free trade agreement with the European Union (CETA,) which has been in provisional effect for over a year, new trade prospects are on the horizon thanks to the entry into effect in December 2018 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP.) Also, in November of last year the “new NAFTA” – the Canada-United States-Mexico Agreement (CUSMA) – was initialled and will take effect following approval by the legislative assemblies of the three signatory countries.

 

BILATERAL RELATIONS

Italy enjoys excellent trade relations with Canada, and it is the eighth supplier to the Canadian market globally (the third European supplier, after Germany and the United Kingdom.)

Between the fourth trimester of 2017 and the third trimester of 2018, imports of Italian goods amounted to 8.8 billion Canadian dollars, an increase over the same period of the previous year.

The balance of trade between exports and imports is in Italy’s favour, with a very significant positive balance of approximately 5 billion dollars.

Among Italy’s principal export are machinery, vehicles, beverages and alcoholic products (wine in particular) and food products. In the latter sector, Italy is Canada’s foremost European supplier (and fourth supplier globally)

Italy’s imports from Canada are primarily mineral products, agricultural products and machinery.

 


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