According to Statistics Canada, in the first quarter of this year GDP dropped by 2,1% with respect to the last quarter of 2019. A more pronounced decline was registered in April 2020 (-11%, compared to March) owing to the stronger impact of the Covid-19 crisis.
Prior to the Covid-19 emergency, Canada was experiencing a positive trend, despite a slightly slower growth rate in 2019 (1.6% compared to 1.8% in 2018).
The impact of the pandemic was felt by the labour market as well, with unemployment levels reaching 13,7% in May, compared to 5.6% in February.
In an effort to boost the economy, the BoC implemented an expansionary monetary policy that gradually reduced the interest rate by 1.5 points, lowering it from 1.75% to 0.25%.
In an attempt to reduce the impact of the Covid-19 pandemic as much as possible, the Canadian government has implemented a broad series of measures to increase aggregate demand and provide immediate stimulus to the economy. The two most significant measures in terms of economic impact are the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Response Benefit (CERB). For more information on all the measures put in place by the Canadian government click here.
Canada’s economy is very open to international trade (about a third of GDP comes from exports). The so-called “New NAFTA”, the Canada-United States-Mexico Agreement (CUSMA), signed in November 2018, is in force from July 1st, 2020.
Bilateral relations
Italy enjoys excellent commercial relations with Canada: according to Statistics Canada, in 2019 Italy was the seventh supplier country to the Canadian market, the second country in Europe after Germany, surpassing the United Kingdom.
In 2019, exports of Italian goods to Canada amounted to 9.45 billion CAD – an increase of 5.0% over the previous year – compared to 3.2 billion CAD of Canadian exports to Italy (source: Statistics Canada). The trade balance, therefore, recorded a very significant positive balance for Italy, in the order of 6.2 billion CAD.
Italy’s primary exports to Canada include machinery, chemicals, motor vehicles and other means of transportation, beverages and spirits (mostly wines) and food products. In this last sector, Italy is Canada’s first European supplier (and fourth worldwide).
In 2019, in particular, there was strong growth in the chemical-pharmaceutical sector (+15%), jewellery and precious stones (+48%) and machinery (+9%). The food sector also registered growth, recording a 5.9% increase (including the export of beverages and spirits) and exceeding one billion CAD in value.
2020 had also begun well for Italy, with an increase in Italian exports to Canada in the first two months of 2020 of 8.6% over the same time last year. Due to the pandemic there has been a slowdown in trade, particularly in April, but when considering overall performance in the first fourth months of the year (Jan-Apr) compared to the same period in 2019, the figures released by Statistics Canada show a drop of only 3.1% for Italian exports, the best result of all Canada’s main trading partners (the European average was -13.8%).
Canada’s exports to Italy are primarily in the mining, chemical and pharmaceutical sectors.
Canada remains an attractive country for Italian companies, thanks also to a favourable investment environment. There is a growing interest from Italian companies in sectors such as energy, infrastructure, manufacturing, as well as information and communication technologies.