Major Growth for Canada's Export Markets, Says Report

Consumer spending and business investment is up, with strong growth projected for Canada's export markets

Written by Staff

“It looks like, this time, the race is on,” says Export Development Canada’s (EDC) chief economist, Peter Hall.

According to EDC’s recent Global Export Forecast, after four years of sluggish global performance, Canada’s export market is about to grow.

“Canadian growth will soon require some fancy gear-changing, and it will be up to trade to shore up the bottom line as the domestic economy slows. It won’t disappoint,” says Hall. “Exports will leave last year’s modest growth in the dust, rising 8% this year and an additional 5% in 2014, benefiting from the resurgence in our largest trading partner, the United States.”

Hall says it won’t be easy to move past recent crashes in the global economy, but he’s confident that growth in exports will lift the world economy by 3.6 per cent this year, and 4.2 per cent in 2014.

He points to the building blocks of an economic recovery that have been taking shape over the past six months as a reason to be confident.

“Quietly, amid the gloom, a different story has been building. Lending activity is improving, bond market spreads are narrowing nearly everywhere,” says Hall. “There’s even evidence of €˜fright fatigue,’ a sign of confidence in the policy responses to successive panic points. And perhaps quietest of all, time has brought healing. Pent-up demand is now showing up in key indicators.”

The forecast cites that the core source of global economic strength is the U.S. economy, where multiple indicators show that the economy is ready to race. U.S. housing, a key harbinger market for the greater economy, has finally rebalanced and is reigniting dormant residential construction.

Consumer spending is up again in the States, and so is business investment.

“Hot private sector growth is being masked by government cutbacks, which are holding overall growth to 2.3 per cent this year,” says Hall. “Next year’s 3.3 per cent gain better represents the groundswell of growth that is already well underway.”

Solid growth is projected for China, Brazil (even though the country had low growth last year) and Mexico.

Europe will not see the same growth, as it has yet to work off its pre-recession excesses to the same extent as the States, and is still mired in recession as a result.

EDC predicts a softer loonie, largely owing to weaker commodity prices and the recent dimming of Canada’s halo effect. The dollar is forecast to average 0.97 cents U.S. this year and 0.96 cents U.S. in 2014.

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