How does the forest industry contribute to the economy?

The Canadian forest industry is an export-oriented manufacturing sector, accounting for almost 7% of all Canadian exports in 2015 ($32.7 billion). Traditional forest products form the backbone of the Canadian forest sector: Canada is the world’s largest producer of newsprint and northern bleached softwood kraft pulp and the second-largest producer of softwood lumber. In recent years traditional and other forest products have contributed 8% to 10% of Canada’s manufacturing gross domestic product (GDP).

Although it contributes less to total GDP than other resource sectors do, the forest sector is a key contributor to the Canadian economy. For example, the forest sector creates more jobs and contributes more to the balance of trade for every dollar of value added than do the minerals and metals sector or the energy sector.

Global trade

Photo of terrestrial globe surrounded by blue shadow

The forest sector contributes favourably to Canada’s trade balance. In 2015, the forest sector balance of trade stood at $21.5 billion, compared to a negative balance for the economy as a whole. Canadian producers operate in the global marketplace and have become less dependent on the regional North American market. Exports to Asian markets, mainly China, helped mitigate the negative consequences of the U.S. housing crash and financial crisis. The U.S. market share of forest product exports has declined from 81% in 2005 to 68% in 2015. However, this market continues to be the primary destination for Canadian forest products and will remain instrumental in supporting forest sector activities in Canada, given the U.S. economic recovery and a slowdown in the Chinese economy. While globalization has also brought increased competition from low-cost producers, Canada will continue to benefit from greater access to large offshore markets.

Innovation

Non-traditional forest products have become more important to the sector and provide clean-tech development opportunities. Expanding product markets include biofuels that can substitute for fossil fuels and biochemicals that can be used to produce biodegradable plastics and industrial chemicals.

The Government of Canada has been supporting sector transformation through a number of initiatives, such as the Investments in Forest Industry Transformation program, the Expanding Market Opportunities program and the Forest Innovation program.

 

Benefits to Canada’s economy, 2015

Table displaying the benefits to Canada’s economy in 2015 for each sector (forests, minerals and metals, energy), their contribution to GDP, their exports per dollar of value added, their balance of trade per dollar of value added and the number of jobs per million dollars of value added.
Sector Contribution to GDP (billions of dollars) Exports per dollar of value added Balance of trade per dollar of value added Number of jobs per million dollars of value added
Forests $22.1 $1.50 $1.00 9.1
Minerals and metals $60.2 $1.50 $0.20 6.2
Energy $131.9 $0.70 $0.40 2.0
Sources
Note
  • The energy sector metrics exclude coal and uranium mining activities.
 
Indicators in this section