“We work in a globalized world and only looking at what’s happening in Canada isn’t going to help Canadian businesses succeed. If companies want to grow their international sales, the Global Economic Outlook is a great place to start. It highlights the driving forces in the world economic prospects that are impacting businesses everywhere.”

Global Economic Outlook (GEO) report card

In the outlook, we take an in-depth look at what’s happening in the U.S. economy, but also look at the health of the Mexican economy because of how interconnected the North American market has become.

Commodities—most often used as inputs in the production of other goods or services—are great indicators, not just for companies operating in that space, but for companies that use some of the inputs in their supply chain. In addition, certain commodities, such as gold and copper, can be indicators of global economic sentiment.

In the section focusing on Global Markets, we look at developing as well as developed economies. The key factor that we focus on is an economy’s rate of growth, as measured by Gross Domestic Product (GDP) growth rates as an indicator of economic health. Strong growth is a sign of economic strength and weaker growth or even economic contraction (i.e. negative growth) could be a distress signal.

NORTH AMERICA U.S. GDP

Details:

The U.S. GDP growth rate is an important indicator we monitor in order to better understand the economic conditions in the U.S. and the potential impacts on your business. If you are exporting to the U.S., you want to know if the outlook for selling goods is positive or negative. GDP growth can help tell you that.

For example, if economic growth is stagnant or even negative (e.g. GDP is -1%) , it tells us that owing to difficult world economic prospects it may be more difficult for you to get business in the first place and that, if you do, your customer may end up not being able to pay for the product or service you provided.

What does the Global Economic Outlook predict?

U.S. economic growth is expected to firm up this year and next

Impact on Canadian exporters over next 6 months

Positive

Who should monitor?

Companies doing business in the U.S.

 

NORTH AMERICA Canadian Dollar

Details:

Put simply: the higher the value of the Canadian dollar (against the US dollar for example), the more expensive it is for international buyers – possibly your customers – to purchase Canadian goods. No customer wants that.

This is why watching currency movement is one of the most important indicators to monitor. While the U.S. dollar has been relatively stable lately, over the last ten years it’s taken some pretty significant ups and downs.

What does the Global Economic Outlook predict?

EDC Economics expects the Canadian Dollar (CAD) to average US$0.77 in 2017 and US$0.79 next year

Impact on Canadian exporters over next 6 months

Monitor

Who should monitor?

All exporting companies, particularly those doing business in the U.S.

Commodities

Even if you are not in the commodity business, commodity prices can impact your business. Monitoring these changes is important as they can act as good indicators for the future, especially if your supply chain and what you are exporting, incorporates commodity-based inputs.

Copper

Details:

Copper prices are often closely tied to economic activity. If there is increased demand in China for copper, for example, that likely means that the global economy is chugging along. If prices start to decrease, this is often a result of less demand for copper, which could mean slowing construction and a scaling back of manufacturing. All of this could indicate that a negative economic event may be around the corner.

What does the Global Economic Outlook predict?

Copper prices have been rallying higher of late and should be short-lived

Impact on Canadian exporters over next 6 months

Monitor

Who should monitor?

Companies with copper in their supply chain

 

Gold

Details:

Gold is sought after for many reasons, one of which is that is retains its value in uncertain times. For example, during the financial crisis, a lot of investors were investing in gold because the U.S. dollar depreciated quite significantly as they felt this was a safe investment during uncertain times.

What does the Global Economic Outlook predict?

Investment is likely to continue being the source of gold demand as traditional sources of demand such as jewelry, technology, and central banks remain soft

Impact on Canadian exporters over next 6 months

Monitor

Who should monitor?

Companies investing in gold, or companies with gold in their supply chain

 

Oil

Details:

Oil is a key input to many industries. It is critical to many means of transportation, both of goods and of people, and the price of oil is a principle determinant in the cost of these transportation services. Simply put, the lower the price of oil the less expensive it will be to ship your goods to your customers. On the other hand, for companies involved in the extraction or refining of oil products either in Canada or abroad, lower prices will impact investment decisions.

What does the Global Economic Outlook predict?

EDC Economics’ outlook for global oil prices remains weak into 2018

Impact on Canadian exporters over next 6 months

Negative

Who should monitor?

Companies with oil in their supply chain, or companies forecasting oil costs

Global markets

World economic prospect indicators include emerging markets, as well as developed countries like Japan and the Euro Area. For Canada, emerging markets are becoming more important every year with exports to many new markets rising exponentially. However, the developing world poses more risks including geopolitical risks so it’s important to monitor these markets on a regular basis.

GDP Growth Emerging Markets

Details:

Like in the U.S., a country’s GDP growth rate is the most important indicator to demonstrate the health of an economy. Keeping a pulse on a particular economy you are targeting is the main starting point.

Markets like China and India are two economies recording more than six per cent growth this year. These economies are growing approximately three times the rate of many developed nations and both have emerging middle classes looking to buy international goods. Again, this can signal opportunities for Canadian companies specifically in industries such as consumer goods and certain specific agri-food sub-sectors.

What does the Global Economic Outlook predict?

We are expecting modest to accelerated growth in many emerging markets around the world

Impact on Canadian exporters over next 6 months

Positive

Who should monitor?

Companies looking to expand or already doing business in emerging markets

 

GDP Growth Developed Markets

Details:

While emerging markets economies are growing at a faster rate than developed countries, companies still need to pay attention to developed countries. The US remains the world’s largest economy and the number one buyer of Canadian goods and services so must always be considered. In addition to the US, Japan and the countries of the Euro Areaare two dominant economies with major purchasing power.

What does the Global Economic Outlook predict?

Developed market economies are exhibiting strong momentum and many are expected to grow at the fastest rate since the global financial crisis a decade ago

Impact on Canadian exporters over next 6 months

Positive

Who should monitor?

Companies looking to expand or already doing business in developed markets