Despite continued geopolitical risks to global trade seemingly at every turn, Canadian export performance has grown at a rate higher than expected – 8 per cent this year over the projected 6 per cent, according to Export Development Canada’s (EDC) latest semi-annual Global Export Forecast released today.
In particular, stronger demand from US companies and consumers for Canadian products and services is playing a big part in that increase, just as NAFTA negotiations reach a critical juncture.
The energy sector’s return to growth is the main reason that Canada’s exports are picking up, as the oil patch rebounds from devastating forest fires and an ongoing lower price environment. The major buyer of that energy? You guessed it: the US. As the US economy perks up and industry begins to churn, energy demands have followed suit.
At the same time, ores and metals will see a big jump as the US and global industrial sectors begin to slowly increase production. That resurgence in production is also driving up Canadian exports of Canadian machinery and equipment in the strengthening U.S. market.
“Canada’s export engine is revved up and firing on all cylinders,” says Peter Hall, EDC Vice President and Chief Economist. “Despite the political signals coming out of the U.S., Canadian and US companies are clear: they want to do more business together. We are seeing more Canadian companies making new business investments in the US and we’re already measuring its impact on boosting demand for Canadian exports, specifically machinery and equipment.”
Highlights:
Sectors posting double-digit growth include:
• Energy 31%
• Ores & Metals 14%
• Industrial Machinery & Equipment 11%
• Energy exports stand at $77 billion and are forecast to grow by an astounding 31 per cent in 2017. However, the intense growth will be short-lived as gains flat line in 2018.
• Services, a key driver in the Canadian export story, will post a positive gain of almost 6 per cent this year and maintain that level of momentum in the longer-term outlook.
• The forestry sector remains in positive territory with gains of 4 per cent, but growth will slow due to the ongoing softwood lumber dispute between Canada and the US.
Overall, Canadian export growth is expected to level out to 4 per cent in 2018 after its 8 per cent gain this year, pushing export growth above pre-recession levels. “We might very well have finally put our feet on the bottom of this long export stagnancy period,” added Hall.
Globally, EDC is projecting world growth to rise from 3.6 per cent this year to 3.8 per cent in 2018, fuelled by robust growth in emerging markets, specifically China, India and Brazil. However, developed markets have turned a corner with major economies recording stronger performances this year.
Developed markets are also providing growth opportunities in the long-term, particularly in the EU as a result of the new Canada-EU Comprehensive Economic and Trade Agreement (CETA). The free trade agreement opens up a market of approximately 500 million people worth $20 trillion to Canadian exporters.
“It’s been a long time coming, but global growth is back,” Hall adds. “Canada’s exporters are poised to gain from this growth throughout 2017 and 2018.”
For the full report, visit EDC's Global Economic Forecast
