Three recent reports show 2017 is shaping up to be a good year for Canadian exports, in spite of uncertainty over what protectionist measures the Trump Administration will invoke.
In November, the country recorded its first trade surplus since September 2014, according to Statistics Canada. It moved from a $1 billion deficit to a $526 million surplus. Exports were up 4.3 per cent to $45.6 billion, owing mainly to strength from metal and non-metallic mineral product exports but also in metal ores, farm, fishing and food products and aircraft and other transportation equipment.
Exports to countries other than the U.S. were also higher than ever before, rising 9.5 per cent to $12 billion the same month, surpassing a record in December 2011.
Meanwhile, the Bank of Canada’s January report projected a moderate increase in exports. It cautioned that while oil production is expected to expand, recent declines in energy-sector investment will restrain that growth. Another moderating factor the Bank noted is the appreciation of the Canadian dollar against the currencies of key competitors.
It projects that total exports will increase by about three per cent on average in 2017 and 2018. That assumes foreign demand will be boosted by U.S. fiscal stimulus, but that positive impact will be dampened by the decline in Canadian competitiveness if the U.S. sees corporate tax cuts.
Finally, in its Fall 2016 forecast, EDC predicted exports would grow by two per cent in 2017, up from 1.3 per cent in 2016.
So what does it mean for Canadian exporters?
We asked three experts to weigh in. All three cautioned that the most recent numbers are from November, so any repercussions from the U.S. election have yet to be reflected. That said, they see hopeful signs.
“What we saw that was a particularly good sign was that exports with countries other than the U.S. were up,” said Joy Nott, president of the Canadian Importers and Exporters Association. “That’s a very good sign.”
She constantly urges Canadians to diversify.
“The U.S. will always be our most important market, but it’s not the only market,” she said, and added that Canadian exporters can sometimes get complacent — “why diversify if you’re sitting next to the golden goose?”
If they’re being shocked into looking at other markets, she said, that will pay off. “There are countries like Brazil, South Korea and China who have an interest in Canadian goods,” she said. “We also have aces up our sleeves — we’re about to ratify CETA.”
Her advice for companies that want to get out there is to look at a map, access the resources that exist to help, and then get on a plane.
“The Canadian Trade Commissioners Service is one of the best services that exists,” she said. “It’s free, and they will hold your hand, help you, give you context. They’re boots on the ground and they’re Canadian.”
She noted that many Canadians who second-guess themselves about world markets forget they already do business with the world’s biggest and most sophisticated market. “We’re savvy,” she said.
Asked what sectors can expect good growth, Nott named agri-food because Canada has an international reputation for being healthy and clean.
Peter Hall, chief economist for Export Development Canada, said the auto sector is “rock solid” for the U.S. and forestry, in spite of the expiration of the softwood lumber deal, is “in for a big run” because of the U.S. housing market. He also sees continued growth in aerospace, agri-food, chemicals, machinery and equipment.
Mike Holden, chief economist for Canadian Manufacturers and Exporters, agreed, saying “if you’re in wood products, or paper or food — basically if you’re taking something out of the ground in Canada, that’s where you maximize the low exchange rate.”
Geographically, Hall likes the U.S. and emerging markets, including southeast Asia, China and India because of the latter’s consistently high growth. Holden said those in the energy sector are looking to the Middle East and Africa.
Holden and Nott both recommended accessing some of the many public and private sector services — EDC has experts as does the Trade Commissioners Service — that exist to help Canadians start exporting. “We need to better link existing services to help businesses,” Holden said.
Hall said it’s a good time to for Canadian exporters to consider putting their money on the table, and added that while others in the world are hesitating, they might find some of the best deals of their lifetime.