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Canada's Performance Report 2006-07 - Annexes
Strong economic growth
Indicators
Real gross domestic product
Cost-competitiveness
Natural resources sustainability
Green economic practices
Real GDP
Current performance and trends
The Canadian economy is one of the strongest and healthiest among the seven leading industrial countries of the G7, which consists of the United States, the United Kingdom, France, Germany, Italy, Canada, and Japan. The real gross domestic product (GDP) grew at an annualized rate of 3.9% in the first quarter of 2007, and 2.8% for 2006 as a whole. This was slightly below the increases experienced in both 2004 and 2005.
In 2006, much of Canada lagged behind the national growth rate, as a 6.8% gain in the value of the Canadian dollar and higher oil prices hampered production, especially in manufacturing. Lower US demand also restrained exports. After Alberta, the only other provinces that managed to top the 2006 national growth rate were Newfoundland and Labrador with a 2.8% increase, Manitoba with a 3.3% increase, and British Columbia with a 3.6% increase.
Additional information: Regional economic growth
Western Canada
Economic growth in Alberta was well above the Canadian average in 2006 for the fourth year in succession. Oil prices continued to advance in 2006, spurring corporate profits and business investment, which, in turn, stimulated labour income and spending. The buoyant economic conditions and a low unemployment rate (3.4%) attracted people from across Canada.
Manufacturing activity in Alberta jumped 7.6% after a 6.3% increase in 2005, with most of the growth coming from petro-chemical industries, or those supplying machinery and equipment to the burgeoning oil sands infrastructure projects.
Output in Manitoba advanced 3.3% after a 2.7% increase in 2005, reflecting the best crop in three years. The ideal growing conditions in 2006 allowed for strong exports of canola and wheat.
British Columbia outpaced the national average growth for the fifth consecutive year with a 3.6% increase in 2006, slightly behind the 3.7% increase in 2005.
Saskatchewan's economic production grew modestly in 2006 (+0.4%), a slowdown from 3.1% in 2005. Production of uranium, potash and wheat fell. Corporate profits remained strong, however, as world demand for these products kept prices high.
Manufacturing of machinery and equipment in Saskatchewan benefited from Alberta's robust investment picture. Labour income strength contributed to home building and a pick up in consumer spending.
Source: Statistics Canada, 2007
Atlantic Provinces
The Newfoundland and Labrador economy advanced 2.8% in 2006, compared to 0.4% in 2005. The first full year of production at the Voisey's Bay nickel mine and the White Rose oil field contributed largely to the advance. Corporate profits benefited from high commodity prices. Consumers took advantage of continued low interest rates and accelerated expenditures.
After increasing 0.3% in 2005, the New Brunswick economy rose 2.6% in 2006. A recovery in pulp and newsprint prices in 2006 spurred the re-opening of two mills, and helped manufacturing advance.
A recovery in agriculture helped Prince Edward Island's economy rise 2.0% in 2006, comparable to the 2.1% growth in 2005. Economic output in Nova Scotia rose 1.1% in 2006, compared to 1.6% the previous year. Manufacturing activity fell for the second consecutive year as production slowed in rubber and plastic industries and labour unrest hampered wood product fabrication.
Ontario and Quebec
As the fortunes of the western provinces hinged on resource production, Central Canada felt the pinch of high fuel prices on economic activity. In addition, a strong Canadian dollar dampened export demand and therefore goods production.
In Ontario, growth reached 1.9% in 2006, weaker than the 2.8% advance in 2005. In manufacturing, production dropped in 14 of 21 major industry groups resulting in the steepest decline in manufacturing (-3.5%) in several years. Motor vehicle producers curtailed production and parts producers were particularly hard hit by US market conditions. The weakness in the manufacturing sector was not felt throughout the economy, as service production benefited from continued labour income strength and ongoing construction investment.
Quebec's economy grew 1.7% in 2006 after posting a 2.2% increase in 2005. Production of services outpaced goods as manufacturing edged down 0.2%. The decline was muted by buoyant export markets for aerospace products. Primary metal production picked up as world prices remained high, and pharmaceutical manufacturers recovered from three years of decline. Not all manufacturers benefited, however, as Quebec's forest and paper industry was hard hit with mill closures and layoffs. Exports of wood and paper products declined precipitously.
The Territories
Advances in territorial economic growth were almost entirely hinged on resources, in particular on mineral extraction and exploration.
The Nunavut economy grew by 5.8%, its best performance since 2002 and a turnaround from the decline of 1.1% in 2005. Jericho, Canada's third diamond mine, began production in January of 2006 and accounted for corporate profit growth and a resurgence in exports. As in the other territories, mineral exploration benefited from high commodity prices.
The Northwest Territories' economy advanced 2.0% in 2006, an improvement over 2005 (+0.1%). Diamond mining fell slightly in 2006 but mineral and oil exploration flourished in the Northwest Territories, particularly along the Mackenzie Valley corridor. Construction investment also advanced at the Snap Lake diamond mine.
Output in the Yukon advanced 2.9% after the torrid (+5.2%) pace of 2005. High commodity prices spurred exploration activity, particularly for gold, zinc, uranium and copper. The investment activity gave a lift to wholesalers as demand for machinery and equipment increased. New store openings paralleled growth in labour income.
Cost-competitiveness
Current performance and trends
The comparison of business costs demonstrates the advantages of locating business operations in Canada. Lower costs encourage the investment, expansion, or start of businesses in Canada. Costs related to labour, transportation, communications, and taxes were some of the factors considered in a 2006 study published by KPMG (Competitive Alternatives: KPMG's Guide to International Business Costs).
In January 2006, Canada's performance in cost-competitiveness had shown improvements in relation to the G7 countries. Among the nine countries studied, Canada leads the G7 countries in terms of low business costs, with a cost advantage of 5.5 per cent relative to the United States (the baseline of the study). Canada has retained its top ranking among G7 countries, although the size of its advantage has been reduced by the strong appreciation in value of the Canadian dollar relative to the U.S. dollar over the last two years. In 2004, Canada had a 9.0-per-cent cost advantage relative to the U.S., down from 14.5 per cent in 2002. According to the study, the decline in the U.S. dollar relative to world currencies was the most important factor affecting international business competitiveness since 2002.
Natural resources sustainability
Current performance and trends
Among the 95 commercial fish stocks assessed between 2003 and 2006, 20 stocks were healthy and increasing; 28 were healthy and stable; and 47 were declining or depleted. A healthy designation is indicative of a biologically sustainable stock, whereas a declining or depleted designation is an indication of concern with regard to the current or future sustainability of the stock within the context of the commercial fishery. The percentage of assessed stocks that are healthy as compared with those that are declining or depleted has increased approximately six per cent since the 2001–03 period. Variables affecting the status of these commercial fish stocks include both natural (e.g. cyclic fluctuations in abundance) and anthropogenic factors (e.g. impacts of development).
It should be noted that this is not a balanced representation of all Canadian fish stocks. Stocks in the North and Pacific salmon are under-represented, due to their assessment schedules, and Fisheries and Oceans Canada intentionally organizes its assessment schedule to regularly evaluate the status of stocks not considered to be healthy. As a result, they may be over-represented in the group of stocks beings assessed.
Fisheries and Oceans Canada, Canadian Advisory Secretariat, 2006
http://www.dfo-mpo.gc.ca/csas/csas/Publications/Pub_Index_e.htm
Green economic practices
Current performance and trends
Maintaining a strong economy calls for the integration of environmental considerations into economic decision making. The number of certifications to the international environmental management standard ISO 14001 is often used as an indicator of a country's development in the use of voluntary environmental agreements and is understood as a form of country-level environmental performance indicator. The number of Canadian firms with ISO 14001 certification increased from 100 in 1999 to 1,492 in 2004, 1,636 in 2005 and 1,679 in 2006.
A report issued by the Canadian Sustainable Forestry Certification Coalition documents that as of June 2007 143,696,992 hectares of forested land in Canada has been certified to the ISO 14001 management standard under the operations of between 60 and 70 forestry companies. The State of Canada's Forests 2005-2006 clarifies that there are 143.7 million hectares available to forestry operations in Canada. (The State of Canada's Forests, http://cfs.nrcan.gc.ca/sof/latest_e.html)
In addition to ISO 14001 there are three major third-party forest certification programs in Canada, the Canada's National Sustainable Forest Management Standard (CAN/CSA-Z809) , the Sustainable Forestry Initiative Program (SFI) and the Forest Stewardship Council (FSC), which all contain specific sustainable forest management performance standards As of June 2007 just over 134 million hectares have received certification under one of the three above standards (CAN/CSA -Z809 - 79,288,918 ha, SFI - 34,887,174 ha and FSC - 20,533,982 ha).
(Certification Canada, "SFM Certification Status in Canada–June 2007") http://www.certificationcanada.org/english/status_intentions/status.php
International comparison
Consideration of the size of a country (measured by population) and its level of economic development (measured by GDP) should be taken into account when using ISO 14001 certification as a measure of green economic practices, as these provide context in which to judge a country's environmental management development.
Canada's international ranking ranges from 33rd in 1999 to 19th in 2001 and 27th in 2003 when taking into account the level of Canada's economic development. When factoring in Canada's size, Canada's 2003 ranking is unchanged from 22nd in 1999, with its highest ranking of 15th occurring in 2001. For both measures in 2003, Canada places second last within the G-7, ahead of only the U.S. Globally, since 1999 Sweden has held the top ranking when economic development and country size are considered, with Switzerland, Denmark, and Finland also consistently in the top five.
Canada is a world leader in certification of forested lands. Only 10% of the world's production forests are certified and Canada's contribution accounts for over half of the certifications recognized by the global Programme for the Endorsement of Forest Certification. Canada also has more fibre originating from 3rd-party certified forests than any other country in the world.
(Certification Canada, "SFM Certification Status in Canada–June 2007") http://www.certificationcanada.org/english/status_intentions/status.php
Additional information: Environmental management systems
- Chapter 11 of the 1995 Report of the Auditor General of Canada, "Environmental Management Systems: A Principle-based Approach" (http://www.oag-bvg.gc.ca/domino/reports.nsf/html/9511ce.html)
- The International Network for Environmental Management (http://www.inem.org/iso/speedo.htm)
