http://www.cbc.ca/money/story/2009/01/30/canada-gdp-december.html
Canada's economy is continuing its slide and the country's economic output shrank by 0.7 per cent. Statistics Canada reported that a slumping construction activity and an struggling manufacturing sector has led to an "industrial race". This is the third one in four in which Canadian GDP contracted. Canada's national output shrank by 0.1 percent in October. In August the Canadian economy slipped by 0.5 percent which indicated a financial slowdown in Canada already. According to Statistics Canada, activity in the manufacturing sector declined by 2.1% in November and employment has fallen by 32,000 or 1.6 per cent compared to December 2008. Building trades were also down 1.2 per cent from November. Economists are estimating that the GDP will slip 0.4 per cent and this is the worst decline in a decade. RBC is forecasting that Canada's GDP will shrink in the final three months of the year by 2.5 per cent.
GDP is a major concept in Chapter 6. It is used to refer to the value of goods and services produced in Canada in a given year. When our GDP contracts, obviously that means that our economy is not producing goods and not providing efficient services to keep our economy afloat. This means a loss in jobs in sectors where they are not producing. Such sectors such as the manufacturing sector stated in the above article. In this time of economic uncertainty, people will generally save rather than spend because their jobs are no longer secure. This results in reduce in flow on income going to the business sector. In turn the business sector will have to cut back in order to gain profit which usually means layoffs for workers. This cycle keeps going and eventually our GDP gets effected. This is why our GDP is falling right now.
This is just another piece of evidence to illustrate the fact that Canada's economy is in very poor shape. The fact that our decline in GDP in November is the worst we have had in a decade is disheartening. For the past few weeks i have seen numerous articles regarding layoffs throughout Canada, particularly the big business such as GM. This is a clear example of business trying to cut back their losses and the common employee is getting the short end of the stick. There is some good news though, our economy is not doing as bad as our neighbors to the south and Japan. Their economy is in a far worse shape than ours currently. Our Canadian banks are very conservative in nature and that is helping our economy, while the American banks are less conservative.
2 comments:
I agree that GDP is a major concern of how it impact canada's econonomy today. I think we should all be more aware of this, in order to prevent a decrease. When real GDP is growing near its long-term potential growth rate a rate which, in turn, is determined by the underlying growth of the labour force and the capital stock, and the pace of technological change then the economy is generally in good shape. A negative rate of change in GDP is typically bad news. When an economy produces less than it did in the previous year, it usually means higher unemployment and a lower standard of living for the population.
This article gives a clear indication that our economy's GDP isn't doing so well. Since Gross Domestic Product refers to the value of goods and services produced, factors that affect GDP mentioned in the article include the decrease in the manufacturing sector as well as unemployment rates. When the quantity of products manufactured is decreased, it results in higher prices. Consumers will definitely think twice when purchasing products that are priced higher than usual. With this in mind, the consumers would be more likely to not spend but rather save. As we learned in Chapter 6, when the overall level of savings is greater than the level of investment, GDP will decrease. Since consumers are holding onto their hard-earned money, revenue for businesses would drop as a result. When businesses start losing, they have to have their best interest in mind, which could mean cutting back on expenses. Seeing that usually the largest expense for a company is wages, there could be potential lay-offs. Once unemployment rates soar, GDP would be affected as well. I understand that the article is trying to propose that our economy is not doing well, not at all.
K. Li
Block F
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