The world economy is forecast to expand by 5.5% in 2022 – a rate that is well ahead of the long-term trend – following a 6% growth above pre-pandemic levels this year, according to an Export Development Canada (EDC) report released today.
“Amid pandemic disruptions, demand among consumers remains strong,” said Peter Hall, Chief Economist at EDC. “The pent-up demand is supported by solid pre-pandemic fundamentals. But it’s the demand that’s the essential driver of a forecast that projects a robust rise in global exports this year and next, with above-average growth into 2023.”
In their latest Global Export Forecast (GEF), EDC economists said they expect the world economy to continue expanding at a rate that is well ahead of the long-term trend both this year and next. Re-openings after pandemic-related lockdowns and persistent consumer spending demand will drive growth into 2023.
After sustaining a 13% drop in 2020, Canadian export growth is estimated to rise an extraordinary 17% this year, and by 3% in 2022.
Growth this year is in large part fueled by a 14% increase in prices, notably for energy, base metals, and wood products. As prices are anticipated to normalize in 2022, volume shipments should rise by 6%, as global supply chains and shipping networks return to still be well above the pre-pandemic average.
Weakened exports in 2022 is attributed to forestry exports, where prices will come down from their unsustainable highs to levels that are still well above the pre-pandemic average. Lower prices are anticipated to weaken energy exports and have a similar impact on shipments of ores and metals.
Sectoral export outlooks:
- The auto sector, shut down almost completely at the start of the pandemic, rebounded in weeks to more than 100% of pre-pandemic shipments. Due to the global semiconductor shortage, however, exports are now back to 75% of pre-pandemic levels and holding. Automotive exports are expected to decrease by 5% by the end of 2021 before climbing back up by 27% in 2022.
- Currently, consumer goods sit above pre-pandemic levels and are expected to increase by 16% by the end of 2021.
- Forest products are expected to surge by 45% in 2021 but will suffer a drop of 27% in 2022.
- Mining exports are expected to increase by 17% in 2021 and will drop by 4% in 2022.
- Chemicals and plastics should rise by 18%, and energy exports should rise by 59% following the decline the sector suffered in the early days of COVID-19.
- Food exports also remain strong and are expected to grow by 9% by the end of the year.
Other highlights:
- Exports are collectively up just 1.5% in advanced economies, and up an impressive 16% in emerging markets. This imbalance in activity is exacerbating global supply chain disruptions.
- Canada’s exports to advanced economies will outperform exports to emerging markets this year (increase in 22% versus 13%, respectively). Among Canada’s major trading partners in 2021, exports to Japan are now the strongest performer.
