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April 25, 2018NOVA SCOTIA INTERNATIONAL TRADE PERFORMANCE 2016: PURCHASING POWER NOVA SCOTIA PURCHASING POWER
When computing the contribution to growth of rGDI, the contribution of growth in rGDP is taken at full value, while the contribution of terms of trade and the contribution of the real exchange rate is dependant (weighted) on the relative size of the export and import market, and price changes in these markets.
Over the period 2007 to 2016, Nova Scotia’s rGDP increased 7.7 points. Nova Scotia’s terms of trade index declined 2.9 points but its contribution to growth in rGDI was only a negative 1.504 points. The real exchange rate index increased 1.8% over the period, but its contribution to growth in rGDI was a net decline of 0.259 points.
Together the contribution of the real exchange rate growth (- 0.259 points), plus the declining contribution of the terms of trade (-1.504 points) yields a net negative growth in the “trade gain” of -1.770 points. The “trade gain” combined with the increase in rGDP (+8.0%) results in a positive growth rate of 5.4% in rGDI index over the 2007-2015 period to 105.4. As the growth rate in rGDI (+5.4%) is less than the growth rate in rGDP (+8.0%), then Nova Scotia purchasing power has declined 2.6 points over the period. (108.0 – 105.4 = 2.6).
In Nova Scotia 2016, the purchasing power index (gross domestic income) increased by 1.14% from 2015 to 105.4 (2007=100). While real gross domestic product’s contribution increased rGDI growth by 0.816 percentage points, the trading gain contribution (the real exchange rate plus the terms of trade contributions) increased rGDI growth by 0.320 percentage points to 1.14%.
Computed from CANSIM Tables 384-0038.
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