TORONTO‑CIBC World Markets Inc. says Canada’s real gross national income (GNI) has been rising faster than the U.S for a decade.
“In real GDP terms, Canada has still trailed (the U.S.),” says Avery Shenfeld, chief economist at CIBC. “But each barrel of oil or pound of copper we produce fetches more in terms of what we can import. Real gross national income has risen faster in Canada than stateside since the turn of the century.”
The bank says the U.S. will close the GNI gap this year because of President Obama’s tax deal deal to defer fiscal tightening and a slight cooling of commodity prices.
The U.S. will also face more painful deficit reduction tasks than Canada, the report says. Canada should also benefit as demand for resources climb higher in coming years as global unemployment levels decrease.
“A more positive long-term view now seems to be shared by the business community,” says Mr. Shenfeld. “Capital spending plans are picking up, and there are some massive projects on our nation’s plate to fuel growth in the years ahead.”
For the first time since 2007, the three heavy hitters of capital investment in Canada are moving in tandem and will take over as the drivers of economic growth.
The oil sands, utilities and the manufacturing sector are expected to add significantly to capacity and leading the domestic economy, not just this year but for years to come.
“Those three sectors should be a potent trio in lifting Canadian business investment skywards as a major contributor to growth in the years ahead,” says CIBC deputy chief economist Benjamin Tal.
Tal notes that Canada’s manufacturing sector is already in a position to start expanding with its current capacity utilization of 81 per cent. Improved capacity rates and rates of return on capital employed in the manufacturing sector is reaching a 10 year high. He added business investment in manufacturing should rise strongly in 2011.