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A Report on Net Export Component of Aggregate Expenditures on Manitoba Macroeconomy

Introduction

The Canadian province of Manitoba has an economy that largely depends on exports. As such, the region gets affected by economic factors that may arise both internally and externally. In the ten years prior to 2011, Manitoba’s economy experienced varying growth conditions. For instance, the rate of growth between 2004 into 2007 remained steady, only to start declining in 2008 and beyond, making down the export growth rate decrease in the following year. The low performance may have derived from the negative economic impact of the global financial meltdown of 2007-2008 that hit the United States the most. That is considering its core export market being the US. Other major export partners include China, Japan, Mexico, Russia, and Hong Kong.

Manitoba’s export commodities are comprised of processed foods, agricultural products, pharmaceuticals, machinery and its parts, transportation equipment, vehicles, plastics, chemicals, minerals, and metals. Additionally, the imports include alcoholic beverages, fabricated metals, printed products, and electronics among others. The imports come from United States, China, Mexico, Japan, Germany, and France. The report focuses on the effect as well as influences of the province’s imports and exports on the area’s Gross Domestic Product (GDP) particularly for the period starting from 2011 to 2015.

Net Export Component of Aggregate Expenditures

Exports

The contribution of net export to the computation of aggregate expenditure is vital. After the global economic meltdown of 2008-2009, the region’s trade and industry sector appears to have gone back on track as of the year 2011. That improvement becomes notable even with the provinces increasing real GDP in 2011 compared to the 2010 performance. Again, that translated into an increased amount of foreign exports originating from the area representing 31.9% of the entire GDP. In comparison with the previous year, the percentage change in the GDP represented by exports depicted an increase by 1.4. In its turn, the exports rose from Canadian Dollar 10.2 billion to 11.7, indicating a margin of 14.7%. However, the recovery of the exports faced challenges in the following year dropping by 2.6% to 11.4 billion. But that change did not last for the subsequent two years, 2013 and 2014, showing growth in exports recording CND 12.5 and 13.5 billion respectively.

Manitoba has a diverse export sector comprising manufacturing, agriculture, mining, and electrical power as the core divisions. For all the four segments, manufacturing accounts for the lion’s share of export, followed by agriculture, mining and electrical power accordingly. For instance, it becomes notable from the analyzed data that the manufacturing sector has always accounted for more than a half of the total exports over the period since 2011. The percentage representing manufacturing in the real GDP is 59.3%, 64.1%, 60.0% and 60.2% for the years 2011, 2012, 2013, and 2014 respectively. On the other hand, agriculture represented almost a quarter with 23.5%, 19.1%, 25.4% and 25.5% over the same period correspondingly. Electricity exports accounted for 2.5%, 2.4%, 2.7%, and 2.5% for the period 2011, 2012, 2013 and 2014 in this order (“Quick facts: Trade exports/imports”, n.d.). That clearly indicates that the remaining percentages for each year accounted for the remaining exports.

Most of the province’s agricultural exports go to the United States fast food giant companies, Russia, and China. Over time, the area became viewed as a bread basket and although the sector delegated most of the impact on the economy to manufacturing, it still stands at position two (Baragar, 2011). Moreover, the manufacturing sector’s vibrant growth in different products promoted their export worldwide. The products include pharmaceutical, vehicle industry, as well as machinery and parts. As for the electricity exportation, the country has an advantage of neighboring the United States, who has become the major and only importer of electrical power.

Imports

Overall, Manitoba’s imports have grown tremendously from the year 2011 to 2014, as well as in 2015 though the year is not yet over. In 2011, the region’s total imports stood at Canadian Dollar 16.2 billion. That rose in the subsequent year to 19.1 billion and retained for the two consecutive years before rising further to 20.4 billion. The province receives most of its imports from the United States, China, Mexico, Germany, and Japan. However, there exists an enormous disparity relating importing countries with the US accounting for impressive 80%. China, Mexico, Germany and Japan account for 5%, 3%, 2%, and 1% respectively with the rest of the world taking only nine percent (Manson, McCallum, & Haiven, 2015). That indicates that the trade regarding imports appears heavily skewed towards the United States. The reason behind it could get attributed to the proximity of the area to the US as well as the economic status and a vibrant manufacturing sector of the latter. The core goods imported to Manitoba include pesticides, turbojets, bulldozers, pumps, taps, valves and cocks, fertilizers, petroleum and oil as well as motor vehicles and accessories. Others comprise trailers, excavators, electronics and harvesting machines.

Conclusion

An analysis of the imports and exports of Manitoba indicates the existence of a trade imbalance. The province seems to import more than it exports. That means that the GDP of the province is still insignificant. However the changes in manufacturing as well as advanced agricultural techniques are expected to help improve the economy of the area. Again, with the world economy being in the recovery mode, the prospects of more exports remain bright.

Despite the economic meltdown, the province had shown indications of growth, particularly in her export markets. The possibility of this continued growth increases with the recovery from the 2007 crisis. Again, the entire Canadian economy has displayed a return to economic growth. That will impact positively the region’s economic performance (Mankiw, 2014). Nevertheless, there exist some challenges that could be detrimental to the expected future growth. Such challenges relate to the effects of global politics and the dimensions they take.

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