OTTAWA, April 17 /CNW Telbec/ - The U.S. slowdown is trickling though the
world's economies and continuing to pressure the Canadian exporter, according
to the semi-annual Global Export Forecast released today by Export Development
Canada (EDC). EDC does not expect the global slowdown to be severe or that it
will drag on.
"The flurry of mixed data has economists and markets shifting rapidly
between upside and downside outlooks," said Stephen Poloz, Senior
Vice-President of Corporate Affairs and Chief Economist. "We believe that the
global economy is at an inflection point where growth will moderate through
2008, down from its recent pace. The wildcard is the continuing possibility of
a retrenchment by the US consumer, a vital player in determining global
EDC is forecasting 4.5 per cent global economic growth in 2007 and
4.6 per cent growth in 2008, down from 5.1 per cent in 2006. Economic growth
in the US is expected to slow to 2.1 per cent in 2007 before increasing to 2.8
in 2008, down from 3.3 per cent in 2006. In Canada, economic growth was
2.8 per cent in 2006, and is forecast to slow to 2.3 per cent in 2007 before
picking up the pace to 2.9 per cent in 2008. Canadian export growth will
mirror global performance, as EDC expects a decline in exports of 1 per cent
in 2007 before rebounding slightly to grow by 1 per cent in 2008.
"While global growth has slowed, it still will be quite healthy through
2008. Ironically, this strength brings stress to Canadian export performance
as the persistent strength in the energy and mining sectors continues to mask
weakness in other key sectors of the Canadian economy," continued Mr. Poloz.
"That being said, Canadian exporters are responding with increased
productivity and more diversification in sales and supply, away from the US
and towards faster growing emerging markets."
Globally, the economic growth cycle has peaked and monetary policy is
generally moving toward a neutral stance. EDC expects a decline in the
Canadian dollar to between 83 and 84 cents U.S. by the end of 2007 before
easing further to between 82 to 83 cents U.S by the end of 2008. The easing of
the Canadian dollar reflects EDC's projected decline in the price of oil to
USD 55 per barrel in 2007 and a further drop to USD 50 in 2008.
Canadian exports to emerging markets grew by 13 per cent in 2006 to reach
a record CAD 40 billion. Growth leaders in 2006 were Russia (53.6 per cent),
India (47.9 per cent), Central and Eastern Europe (28.8 per cent), Mexico
(25.2 per cent) and Africa (23.9 per cent). EDC expects export growth to
emerging markets to continue in 2007, with an increase of 7 per cent, before
slowing to a still-healthy 4 per cent in 2008.
Provincially, EDC expects mixed performance across the country. The
highest forecast rates of export growth in 2007 and 2008 will be Saskatchewan
(9 and 2 per cent), PEI (2 and 4 per cent) and Manitoba (3 and 1 per cent),
reflecting a strong national agri-food sector. The lowest rates of export
growth are forecast for New Brunswick (-6 and 0 percent), and also for Ontario
(-3 and 0 per cent) and Quebec (-2 and 0 per cent) where manufacturing
activity is most concentrated.
Export sectors that are forecast to see continued growth in 2007 and 2008
are fertilizers (20 and 14 per cent), agri-food (9 and 4 per cent), machinery
and equipment (3 and 5 per cent), and telecom (2 and 2 per cent). Certain
sectors, such as machinery, telecom, aerospace components and other high-tech
goods are working the new trading environment to their advantage by utilizing
more imported inputs as well as other cost-saving strategies. This grouping is
expected to perform well through the next few years.
Export sectors that are forecast to experience declines in 2007 and 2008
will be consumer goods (-6 and -4 per cent), autos (-6 and 1 per cent) and
forestry (-4 and 1 per cent), as these beleaguered sectors continue to face
challenging conditions. A softer pricing environment will also dampen export
receipts for energy (-2 and 1 per cent) and metals (0 and -4 per cent).
"Trade is increasingly unfettered by geography. As the relevance of
borders and distance decreases, the newfound proximity between economies
increases their impact upon one another," added Mr. Poloz. "This year, the
U.S. slowdown is impacting the rest of the world. The good news is that the
slowdown should not be severe and is not anticipated to drag on."
The Global Export Forecast addresses the latest global export conditions
including perspectives on interest rates, exchange rates, as well as export
strategies to help Canadian companies minimize risk. It also analyzes a range
of downside risks for which exporters should be prepared.
EDC's semi-annual Global Export Forecast is available on EDC's web site
EDC is Canada's export credit agency, offering innovative commercial
solutions to help Canadian exporters and investors expand their international
business. EDC's knowledge and partnerships are used by 7,000 Canadian
companies and their global customers in up to 200 markets worldwide each year.
EDC is financially self-sustaining and is a recognized leader in financial
reporting, economic analysis and has been named one of Canada's Top 100
Employers for six consecutive years.
For further information:
For further information: Phil Taylor, Public Affairs, Export Development
Canada, (613) 598-2904, email@example.com