The mutual fund industry directly contributes $5.8 billion to annual GDP in Canada, but its total economic impact is almost triple that number, according to a new report from the Conference Board of Canada.
The report, which was funded by industry lobby group, the Investment Funds Institute of Canada (IFIC), estimates that the fund industry directly contributed $5.8 billion to the national economy in 2012 and employed over 63,000 workers. But, it adds that when knock-on effects are counted, its economic impact rises to $17 billion, supports 192,600 jobs.
The report says that for every $1 million generated by the mutual fund industry, it creates an additional $1.3 million in indirect activity, such as demand for legal and accounting services. Directly and indirectly, the industry generated a $12.6-billion increase in primary household income in 2012, and a $2.3-billion increase in corporate profits, the report says. This, in turn, generates $5.1 billion in government tax revenue, it says.
This puts the industry’s economic impact at slightly less than the aerospace manufacturing industry, but notably more than forestry and logging, the Conference Board notes.
The report says that direct impact measures the value added to the economy that is attributable directly to the sector’s workforce, through wages earned, and firms’ profits. Indirect impact measures the activity generated by their demand for intermediate inputs or other support services.
It notes that, for the fund industry, the majority of the supply chain and induced impacts occur in the finance, insurance, and real estate industries, but that professional, scientific, and technical services; administrative support services; and food services and accommodation; also feel an effect.