Answer

Report on the Export Component of the Aggregate Expenditures for the Manitoba Macroeconomy

Manitoba economy depends on natural resources and agriculture. Other contributors to the economy are mining, manufacturing, transportation, tourism, energy and forestry. According to the 2016 data, Manitoba’s GDP stood at C$67.863 billion (MacArthur, 2017), representing a growth of 2.33 %.

Figure 1. Quarterly oil prices 2008-2011

Recent Trend

According to the data collected on 2017, Manitoba witnessed a growth of 2.5% in GDP. Nominal GDP grew by 4.5%. The growth, however, were below the government target of 3% and 5.4% .The high growth rate in the Manitoba economy is facilitated by the increase in the exports by 21.9% within ¾ of the year (Hum, 2009).

Additionally, in the first six months, motor vehicle sales rose by 19%, and there was an increase in cash receipts and agricultural products. The Manitoba economy witnessed 1.7% GDP growth. It is estimated that the GDP will improve due to increase in the exports caused by the rise in the production and availability of natural resources. The export of the natural resources brings the country foreign currency. Manitoba having the required skills and resource (both capital and power), enables it to exploit the resources and sell them easily, which results into growth of the economy. Other factors that are expected to boost the economy include the manufacturing sector, increase in the investment spending by both local and international community; and development in power and infrastructure; which are jointly focused towards ensuring that the economy witnesses a 1.7% growth in the year 2017.

Explanation of Data

The improvement reported on the export of agricultural products was facilitated by increase in agricultural produces. However, the Manitoba and Canadian economies at large may face depreciation. The deterioration of trade between the United States and Canada will affect the balance in the export and import of goods. Specifically, enactment of the border tariff by the USA means that Canadian exports will drastically drop in quantity. America is one of the biggest export markets for Canadian goods, which implies that such embargos will create a trade imbalance between two trading nations. President Trump enacted the imposition of tariffs on steel and aluminum, which will affect Manitoba’s economy as it is majorly dependent on natural resources. In addition, the overall trade of goods between the two states will deteriorate as Trump had earlier labeled the Canadian steel industry “a threat to his citizens’ security”. This may affect the anticipated economic growth of the two states. Trump’s move is against the theory of international trade which states that: “for an international trade to thrive, there should be non-interference by the government. Variation in the produce and products among the various states creates a demand that results into importation and exportation.” enacting sanction, thus, affects the balance in the demand and supply among the goods from the different producing countries. The imposition of the sanctions by the USA can be interpreted as a form of mercantilism economic system where a nation uses its supremacy to enact regulations and tariffs that benefit only herself. A powerful country may impose unnecessary tariffs which may affect the disadvantaged nation. The government policy is seen as a way of oppressing the less developed with the aim of enriching themselves.

Increase in the production levels increases the profits among the manufacturing industries as there is increase in the volume of the goods sold. Addition there is a reduction in the unit cost of production (economy of scale) (Baragar, 2011). To the manufacturers, the increase in the revenue causes them to develop new products and more jobs and expand their current operations. The lower unemployment rate created a means where there will be increase in the wages due to the law of consumer demand. The result is that there is increase in consumer spending which result into economic growth.

Prediction

Manitoba has largely invested in infrastructure and power. The results are that economically, there has been enough energy for the manufacturing companies which have seen the overall reduction in the cost of the operation (Bernard, 2003).  Low operation costs mean that the goods produced are of low prices than the competitors. The results are that the companies operating in the Manitoba will have an added advantage over their rivals. This means that they will face little competition from the competitors. The reduction in the competition means that there will be high returns which will allow the expansion and growth of the various industries. The growth of the industries means that there will be creation of employment which in turn will increase domestic income. Additionally, the low operation cost in Manitoba will ensure that foreign importers and exporters will be willing to partner with the country. The result is that the economy will be boasting through getting increased domestic income as well as foreign income. This will make Manitoba grow faster.

Technology has made the whole world share the same trading bloc (Heijdra, 2017).  This will be an advantage to the Manitoba manufacturers as they will be able to showcase their products globally. They will be able to avoid competition brought by the production of similar goods or substitute goods. In the end, Manitoba economy is expected to grow rapidly.

However, the growth of Manitoba economy may face the challenge of regional rules and regulations. Different trading blocs and countries have put blocks to prevent foreign competition (Johnson, 2017). This is in the aim of safeguarding the interests of local producers. In doing so, the various countries affect the expert and imports of the goods. Hence, despite the fact the Manitoba may witness increased production, factors like sections and trading rules may make the country undergo loss through lack of market. The result is that they may have excess goods. The lack of market means that perishable goods like the agricultural products may go into waste which will result into total loss. This may affect the production of the goods. In the long run the country may just decide to produce what it can offer to both domestic and international market, which will result into low production.

Conclusion

In conclusion, the growth of Manitoba economy is largely dependent on factors that they have little control. Factors such as international trading rules and Government intervention may affect the predicted growth in the economy. However, if all factors remain constant, the Manitoba government have laid a good foundation for the country’s economic development.