Canada's export composition transformed by this key sector

Canada’s services exports have recovered and overtaken their pre-recession levels. Currently they stand at $21.2 billion (2013 Q2). This is in sharp contrast to merchandise exports, which remain 9 percent below their pre-crisis levels.

Growth in Service Exports

From 2000 to 2012, commercial services accounted for 80% of the improvement over transport, government and travel services

Data: Statistics Canada
Source: Office of the Chief Economist, DFATD

About 80 percent of this recovery is due to an expansion in commercial services exports. Included in the make-up of commercial services are a number of services, chief amongst them being professional and management services; telecommunications, computer, and information services; and technical, trade-related and other business services. Together these three sectors constitute about 59 percent of commercial services.

Since 2000, Canada’s exports have become increasingly characterized by their resource-based nature. Services exports have helped to partially offset this trend. Over the same timeframe, services exports have increased their share in Canada’s goods and services exports from 12 percent in 2000 to 15 percent in second quarter of 2013. Of the four major categories (i.e. travel, transportation, government and commercial services) commercial services have experienced the fastest growth during the past decade.

Showcasing Canada’s highly skilled workforce, and counterbalancing the rapid growth of resource-based exports, Canada’s services exports represent a key transformation in Canada’s export composition.

The Upshot

While Canada’s merchandise exports have been lagging, Canada’s service exports have been taking up the slack. Canada’s highly educated workforce in services production is the source of this comparative advantage, and is expected to continue to support growth going forward.

For more information, visit Global Affairs Canada’s Office of the Chief Economist.

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