ECONOMY OF CANADA

The Economy of Canada

[Name of the Student]

The Economy of Canada

Part 1

Requirement 1

There are several factors that affect the economic growth and development in Canada. There are several economic downturns encountered by the economy of the country; however, the analysts predict that the upcoming years will be favourable for the country. Real GDP growth in Canada is expected to remain fairly robust during the next five years. In 2005 a slight deceleration was forecasted in growth. Apart from conditions in the US, the performance of the Canadian economy will depend on two main factors: global commodity prices and the domestic housing market. Canada would be among the G7 countries least exposed to a euro area collapse, but it would be unlikely to escape the negative economic impact of such an event. International trade is one of the key contributors of Canada's GDP. In addition, the revenues earned through international trade assist the country to acknowledge enhancement if its economy as the income earned comprises one-third portion of GDP.

Commodities are key export, but Canada's foreign markets can be sensitive to sharp rises in the prices of these goods (Baldwin, Hanel, 2003, 66-78). It is expected that the exporters operating in Canada will probably encounter transformed downturn in Euro zone. For the development of Canadian economy, one of the key concerns is concerned with China which is supposed to be responsible for the policy-persuaded deceleration. China is one of the important nations that possess vital importance for Canada as an importer. There are varieties of commodities that are exported by Canada; China is one of the key contributors in Canada's economy as it purchases the commodities exported by the country. The value of Canadian dollar is enhancing with the passage of time; in addition, the trade balance of the country is feasible as compared to previous years acknowledged by the country (Ayres, 2004, 64-85).

In 2005, it was forecasted by Canadian financial analysts that reducing Canadian government spending would reduce the budget deficit. Increased tax revenue will reduce the budget deficit. Often, reducing marginal tax rates can increase the amount of taxes collected, as it was when the capital gains and dividend rates were lowered in 2003. As Canadian government budget deficits have tapered and even went away there have been many suggestions to deal with potential budget surpluses. During 2002, Canadian currency was starting to misplace its value. Nonetheless, due to the economists' effective strategies Canadian dollar attained substantial market value in 2005.

Environmental policy has become less of a priority for the majority Conservative government. Moreover, the economy and trade policies regulating in the country are revised in order to update the policy with appropriate strategies. In the past years, the value of Canadian dollar has been lower than the value of US dollar; nonetheless, the country is striving hard to improve their exchange rate and aiming to leave behind US dollar in upcoming years. In fact, the Conservative government is loosening some elements of environmental legislation, which is likely to make ...