OTTAWA—The Conference Board of Canada says the United States will remain Canada’s largest trading partner “by far” by 2025, but a new report says emerging markets offer the greatest potential for export growth.
According to What Might Canada’s Future Exports Look Like?, an analysis of the nation’s export dealings around the globe, Canada’s exports to India, Mexico, China and Brazil are projected to increase by less than two per cent each over the next 13 years.
“An important shift is underway,” Conference Board principal economist Kip Beckman said in a statement.
“Trade with the U.S. has not grown in real terms over the past decade,” Beckman continued. “At the same time, Canada’s trade with fast-growing markets elsewhere is taking off.”
According to the Conference Board, Canada’s goods exports to China soared from less than $3-billion in 1990 to $15-billion by 2011.
Based on the assumptions of a Chinese average annual growth rate of close to seven per cent, Canadian exports are projected to hit the $45-billion mark by 2025.
At that point, China’s share of Canadian goods exports would increase to 6.8 per cent from three per cent at present.
The same pattern is visible in other fast-growing markets, the Conference Board says.
The share of Canada’s goods exports to India will more than double to 1.9 per cent of overall trade by 2025; exports to Mexico will also rise as a share of overall trade, from 1.2 per cent today to two per cent in 2025; and trade with Brazil will also double by 2025 to reach 1.3 per cent of overall Canadian exports, according to the report.
In contrast, it says Canada’s goods exports to the U.S. are projected to expand by about two per cent annually through 2025 on average, which is actually an improvement from the flat growth in volumes over the past decade.
Nevertheless, the share of Canada’s overall goods exports that go to the U.S. will drop from almost 75 per cent in 2010 to 68 per cent in 2025.
Assuming that the European Union (EU) can solve some of its current economic woes and the eurozone stays intact, merchandise exports from Canada to the eurozone are expected to expand at a modest pace.
From a four per cent of share of Canada’s exports at present, the EU could increase its share to 5.6 per cent by 2025.
Exports to the United Kingdom and Japan are forecast to decline as a share of Canada’s exports, largely because of weak projections for economic growth in both economies.
The U.K. share of goods exports is expected to fall from 2.9 per cent today to 1.9 per cent in 2025, according to the Conference Board, while it projects Japan’s share to drop from 2.3 per cent at present to 1.6 per cent by the end of the forecast period.
Despite the projected growth opportunities in the aforementioned emerging markets, Beckman said those opportunities may not bear fruit if Canada’s infrastructure is not up to the challenge of handling demand for raw material export.