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Canada and Saudi Arabia: An economic perspective

Canada and Saudi Arabia: An economic perspective

Posted on: 8/13/2018 | Author: ATB Financial's Economics + Research Team

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Canada doesn’t often make headlines for quarrelling with other nation-states, but it did recently. Last week, Saudi Arabia took exception to Canadian criticism.

As a result, the Saudi government decided to retaliate. It cancelled air service through Toronto, recalled thousands of students studying in Canada, froze all new Saudi investment and trade, and announced it would no longer purchase Canadian wheat and barley. While this sounds extensive and worrying, Canadians shouldn’t be alarmed. Economically speaking, the stakes of this situation are low.

Of the $546.6 billion worth of Canadian products that were shipped around the world last year, only 0.3 per cent of that went to Saudi Arabia (approximately $1.5 billion). According to Trade Data Online, wheat doesn’t even exist on the top 25 product categories that Canada sends to Saudi Arabia. Barley only represents three per cent of total exports to Saudi Arabia.

At first glance, Saudi Arabia’s reaction to this dispute seems heavy-handed. But, because Canada doesn’t have extensive trade relations with the country, Canadian businesses and consumers do not need to fear economic ramifications.

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