The overall strength of both the U.S. and global economies are the key drivers for Canadian exports, and Export Development Canada says the current synchronized global upturn is "pretty much as good as it gets"
The crown corporation said Oct. 19 that overall exports are expected to grow eight per cent in 2017, led by “massive gains” in the commodity space, and four per cent next year.
“Things are definitely improving with respect to the U.S. and global economies, notwithstanding the issues around trade negotiations and political risk,” said Todd Evans, principal at EDC Economics in an interview ahead of the report’s release.
“When it comes to a synchronized global upturn, this is pretty good. In terms of that synchronicity it’s pretty much as good as it gets.”
At $77 billion, EDC says oil and gas exports are forecast to have grown by 31 per cent, after production was hit last year by the Fort McMurray wildfire.
The boost from energy exports will make up half of the gains for the year, though EDC says that growth is expected to flatline in 2018 as high levels of global oil supplies come online.
Ores and metals are also seeing gains this year, with double-digit growth led especially by increases in iron ore exports, but lower anticipated prices next year for the metal are likely to slow growth in that sector as well.
EDC says aerospace should also come out ahead this year after a weak showing last year, while forestry is expected to take a hit both this year and next from the ongoing softwood lumber dispute.
Evans said that despite disputes with the U.S., including Bombardier tariffs, softwood lumber, and general NAFTA renegotiations, he still expects eventual resolutions.
“Our baseline is that given the strength of the Canada-U.S. economic relationship, we believe that a deal will be reached eventually and Canada-U.S. trade will remain intact.”
He said that while trade agreements do help with exports, it’s the overall strength of both the U.S. and global economies that are the key drivers.
“Yes, trade agreements are important in sort of setting the groundwork, but really what drives the Canadian export cycle is the business cycle.”
Evans said services continue to grow as a component of Canadian exports, with five per cent growth last year and six per cent expected this year and next.
Sectors that are expected to see growth this year and next after dropping last year include chemicals and plastics, aerospace, fertilizers, and industrial machinery and equipment.