Canada’s economy is among the largest in the world, ranking fifteenth in terms of GDP (PPP) in 2014 (IMF, April 2015). Until the early 20th century Canada had a predominantly agricultural economy. Even after World War II, a quarter of the workforce was still engaged in agriculture. Today, it is highly industrialised with one of the world’s highest per capita income rates. Ontario is the centre of economic activity and the province with the largest manufacturing base and agricultural sector. Toronto in Ontario is the leading financial and services centre. The country is exceptionally well endowed with natural resources: minerals, petroleum and natural gas, forests, extensive coastal waters for fishing, and rivers and falls for hydroelectric power.
Canada is among the world’s leading exporters of potash, uranium, nickel, zinc and asbestos and a major producer of aluminium, cadmium, cobalt, copper, gold and, in the 2000s, diamonds. There are large reserves of nickel, copper and cobalt, as well as oil and gas – reserves of oil were estimated in January 2014 to be 174 billion barrels, and of gas, 2.0 trillion cubic metres.
Economic links with its giant neighbour were cemented by the Free Trade Agreement of 1989. This was subsequently enlarged to include Mexico under the North American Free Trade Agreement (NAFTA).
Both federal and provincial governments have undertaken privatisation in order to reduce their fiscal deficits. Air Canada was privatised in the late 1980s and rail networks Canadian Pacific and Canadian National Railway followed by the mid-1990s. There are limits to the level of foreign ownership permitted in areas such as broadcasting, telecommunications, transportation and uranium mining.
The country has one of the world’s most open economies. It enjoyed strong growth from the mid-1990s, mainly in exports and the services sector, and growth in manufacturing output averaged around three per cent p.a. during the decade.
Good economic growth continued into the 2000s, until 2008 when investment and exports collapsed in the world economic downturn and the economy went sharply into recession. Despite the government’s taking strong measures to stimulate the economy, recession persisted into 2009, with an overall decline of 2.7 per cent in that year, but recovering well in 2010 (3.4 per cent), and steady from 2011. Growth then continued at rates that were mainly above two per cent in 2011–15. The unemployment rate, which had fallen below six per cent in 2007 – its lowest level for over three decades, averaged 8.3 per cent in 2009 and only fell below seven per cent in September 2014.