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Economic Cooperation

 

Economic Cooperation

Canada has been experiencing strong economic conditions in the last two years, closing 2018 with a GDP growth rate of 1.8% and following the excellent performance of 2017 (+3%). The unemployment rate is roughly 5.7%, one of the lowest rates in recent decades.

Analysts expect a positive result for 2019 as well and the latest estimates of the Bank of Canada (BoC) - see the latest monetary policy report - predict a growth rate of 1.5%. According to the BoC, the reasons for the slowdown in growth include both international factors (uncertainties arising from recent international trade friction between the USA and China, and the possible withdrawal of the United Kingdom from the European Union) and by domestic factors (lower consumption due to higher household debt and a reduction in investments, particularly in the hydrocarbon sector). Inflation remains within the limit of 2% set by the BoC, which is keeping the overnight interest rate at 1.75%.

With regard to international trade, in 2018 Canada’s balance of trade improved by 22.5%, increasing from -15 billion CAD in 2017 to -11 billion CAD in 2018 (source: Statistics Canada). Canada’s economy is very open to international trade as one third of the GDP originates from the export of goods and services. In November 2018 Canada, the United States, and Mexico signed the CUSMA, Canada-United States-Mexico Agreement. The so-called “new NAFTA” will enter into force after approval by the national assemblies of the signatory States. Meanwhile, in December of the same year, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force between Canada and 10 countries of the Asia-Pacific region (Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam).

 

Bilateral Relations

Italy maintains close trade relations with Canada and according to Statistics Canada, in the first eight months of 2019, Italy became the seventh largest supplier to the Canadian market, second in Europe after Germany.

In 2018, exports of Italian goods to Canada amounted to approximately 9 billion CAD, an increase of 10.2% over the same period of the previous year, while Canadian exports to Italy reached 3 billion CAD (source: Statistics Canada). The trade balance therefore showed a very significant positive balance for Italy of 6 billion CAD.

The main Italian goods that play a key role in export to Canada are machinery, automobiles and other transport vehicles, beverages and spirits (especially wine) and food products, where Italy is the 1st European - and the 4th worldwide - supplier to Canada. Italy’s principal imports from Canada include primarily minerals and chemicals products and machinery.

 


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