Question

What is the current impact of lower oil prices on the Canadian economy?

Answer 1

As we know that Canada is the net oil exporter and thus decline in oil prices is going to have adverse effect on the country. Fall in oil prices will lead to change in consumption pattern of the people and consequently there will be a fall in Canadian dollar, due to which economy's resource sector will suffer because of low investment and employment, and non-resource sector will flourish because of more investment and employment.

There is boost in non-energy exports because value of Canadian dollar has declined. More investment and more jobs are created in non-energy sector only, along with that labor market have suffered as well. If the oil price situation remains the same for next seven years then on average Canadian economic growth will suffer at least 23% downfall. As there are regional differences, some provinces are going to benefit and some may loose because of this fall in oil prices. But ultimately economic growth of the country will suffer a lot because of low oil prices.