Trends Impacting Canadian Economy

Canada being one of the wealthiest nations has shown a noticeable growth over the past few years. Canada has the mixed economy system having both open and controlled system which results into having disrupted by many factors. So, these are some trends which influence the Canadian economy:

A debt can be because of many reasons which can totally depend on the household income. About two trillion of the debts were paid by the government last year which makes up to almost three quarter of the debt owed. “Canada’s case in year 2014, household debt is around 170 per cent of disposable income. In other words, the average Canadian owes about $1. 70 for every dollar of income he or she earns per year, after taxes”. This is because of the strong desire to own a home to secure our future generations, higher educations, credit which results in making mortgages on high prices leading to high debts. The interest rates, high debts and increasing prices have a strong connection. Ultimately, what matters is paying the debt according to the income. The debt ratio in early 1990s was very stable in the range of 5 to 7 percent with low interests and increased in last 30 years. Among all the states, Manitoba has the lowest consumer debt on average of $18,312 and Alberta has the highest of $27871 which leaves an average of $22125 according to the survey last year. Consumer debt can be challenging and can have adverse effect on the business. Our business of a café which involves the food industry and perhaps the delivery of finished goods to the customer. Increased rates might affect our business as not every customer willing to accept hikes in prices. For example, a coffee costs $1. 79 might cost $1. 99 due to the effect but the effects are considered to be low.

Due to various pressures Inflation will have a negative impact on economy. One can measure inflation by the stock of goods and services consumed by a consumer. Market prices hold an important value but in the presence of inflation market prices don’t convey the value clearly also its information also gets vague. Inflation was at its peak during 1980s at 12. 5 per cent. But as noticed, inflation has been controlled since 1992 successfully below 3 per cent. For an example, if the inflation rate is 1. 52 per cent in 2012, then it would cost $101. 52 in 2012 which was $100 in 2011. This implies that it weaken the purchasing of consumers. High Inflation reflects the vulnerability of the economy system which tends to lose the value of money. Hence, Inflation is better be controlled for good for our business as increase in prices results in overall budget and ultimately cause hike in products and taxes.

The relativity of the Canadian dollar to other national currencies plays an important role to determine the value of its currency. However, it depends on other financial concept too. When we read or hear the Canadian dollar going up or down which is specifically about the “exchange rate”(normally called as forex rate). It can be also defined as the convertible rate of one currency in comparison to another. Mostly, the exchange rate is compared with American dollar. Sometimes it also happens that the exchange rate can be relatable to other countries. Let’s say if the CAD is increasing in comparison to USD then it might be decreasing for Pound and other European currency. Hence the government ideally try to maintain the exchange rate or increase at most up to $0. 89 - $0. 9 to avoid other impacts and maintain the competitiveness because parity can weaken the competition. For example, suppose a person wants to travel US from Canada and which has the exchange rate of 0. 85 dollar which means for every dollar they get 0. 85 dollar in return. Therefore, if one wants to convert $100 CAD then it can get $85 USD in return. Similarly if a person wants to travel Canada from US having the same exchange rate one would receive the $1. 17 CAD of every USD means it would have $117 CAD for $100 USD. As for our business as it may involve import and export processed between the countries which may have effect upon the figures if the exchange rates fluctuates. It can be good or bad depending the exchange rate of the country.

Canadians having higher participation as in aged workforce is not so strange. The participation rate has been increased since past few years to around 36 percent. For as example, in 2016 the rate increases to 36 per cent which is the highest among the last decades. Several factors other than high education, hourly wages can also be the reason such as debts on mortgage. As the per cent is really high for the old age employment which will be retired in next decade results in high employment. However, the entries are less than exits. Canada has the highest immigrants has its own challenges and opportunities. Immigrants must feel secured and welcomed in the country which can enhance the economy and can attract more immigrants. As per conference board of Canada’s report” if Canada does not welcome any immigrants over the next 20 years, Canada’s economic growth would slow to an average 1. 3 per cent annually. It is also predicted that by 2034, immigration will account for 100 per cent of population growth as the number of deaths in Canada is expected to exceed births”. With immigration comes multi-culturalism which brings lots of opportunities like retails sector, business and many more results in overall growth. These trends tend to grow if the immigrants are increased. For our business, restaurants tend to gain positive results due to immigration and multi-culturalism as people seek for different flavours and also the employment opportunities to the students seeking part time jobs.