Canada’s trade in services has bounced back strongly
The value of service exports and imports at the national level fell in 2020 but has since recovered
By Rob Roach, ATB Economics 14 November 2023 2 min read
Statistics Canada recently released detailed data showing that about a fifth ($362 billion) of Canada’s $1.9 trillion of international trade last year was in the form of services* such as air travel, consulting, and shipping fees rather than the transfer of physical goods such as crude oil, wheat, or auto parts.
Canada exported $173 billion worth of services in 2022. We also imported $189 billion worth of services.
At about 11% last year, services are a smaller portion of Alberta’s total international trade than in Canada as a whole. This is largely due to the massive role played by oil and gas exports in Alberta’s trade mix.
The total value of service exports and imports at the national level was pushed down by 15% in 2020 due to pandemic-related disruptions. In Alberta, the drop was less pronounced, but still large at 11%.
A strong rebound in 2021 (+10%) and 2022 (+21%) has since pushed the national total above its pre-COVID level by 13%.
It’s a very similar story in Alberta, with strong rebounds in 2021 and 2022 leaving total services trade 14% higher last year than in 2019.
Provincial-level data are not available by type of service, but we can tell from the national data that the impact of the pandemic varied depending on the category of services in play.
The travel** services category plunged by 60% in 2020 and was still 15% below its pre-pandemic level in 2022. The gap has continued to close in 2023, but the value of travel service exports and imports remained 7% lower over the first nine months of the year than over the same period in 2019.
The transportation category experienced a 27% drop in 2020, but—helped along by elevated marine cargo and container rates—surpassed its pre-pandemic level by 7% in 2022.
Unlike travel and transportation, commercial*** services continued to grow during the pandemic, posting an increase of 10% in 2020 and 14% in 2021. Statistics Canada attributes this to “a resilience facilitated by rapid digital transformation in industries in Canada and worldwide. … In the face of substantial pressure, business services traders tended toward digitally delivering many services exports throughout the pandemic.”
*Trade in services covers transactions in travel services, transportation services, a range of business and professional services (referred to as commercial services), and government services.
**Travel covers primarily the acquisition of goods and services in an economy by an individual while traveling such as expenditures for food, lodging, recreation, gifts and other incidentals, as well as local transportation in the country of travel. Travel excludes passenger fares for international travel, which are included in transportation.
***Commercial services include, for example, telecommunications, insurance, financial, information technology, management, engineering and research services.
Answer to the previous trivia question: The economic problem that human wants cannot be fully satisfied with available resources is called scarcity.
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