EDC Report: Despite growing protectionism, global trade is on the rise
Export Development Canada is projecting world trade growth to rise from 3.5 per cent this year to 3.8 in 2018; an upswing in momentum as growth has hovered around 3.5 per cent during the last five years
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OTTAWA—Canadian exporters are facing a clash of increased global opportunities with impending geo-political risks, throwing their plans and strategies into confusion.
This is according to Export Development Canada’s (EDC) latest semi-annual Global Export Forecast.
EDC says that while geo-political instability will cause some businesses to hesitate growing their trade business or making foreign investments, overall world trade growth will press on, continuing to gain momentum in the short term despite the uncertainty.
“This is a story of risk, opportunity and what ifs. Even as the architecture of international commerce is being questioned in the political space, we are convinced that the business end of world economy will continue to gain steam in the short term,” said Peter Hall, EDC senior VP and chief economist.
EDC is projecting world growth to rise from 3.5 per cent this year to 3.8 in 2018—an upswing in momentum as growth has hovered around 3.5 per cent during the last five years. However, rising protectionism, namely in the European Union and the United States, presents a risk to global growth.
“Is this the beginning of the end for globalization? That’s highly unlikely—the cost is massive, and everyone gets a bill in the mail. Remember, a wrecking ball doesn’t only swing one way—it swings back,” said Hall.
He continued, “The message that EDC has for Canadian companies is to stay in the game and win the contracts that others have been frightened away from.”
EDC says emerging markets will be big beneficiaries of this increased global growth and indicators point to new possibilities for Canadian companies.
“Tightening in the key U.S. and EU markets translates into increased activity on the export front in the emerging world. We’re seeing that businesses are seeking out opportunities and yield beyond the U.S. and Europe,” said Hall.
- In Canada, higher commodity prices will fuel a 6 per cent increase in the country’s overall export performance for 2017.
- New and accelerating global growth will further boost Canada’s international sales by 5 per cent in 2018. This is a noteworthy increase over 2016 when exports stalled, thanks to a sharp decline in the energy sector.
- The energy sector rebound is leading Canada’s export rebound, expected to notch an 18 per cent increase in 2017. Growth will continue in 2018 with an additional 7 per cent increase.
- Other good news includes an 11 per cent increase in ores and metals, and notable increases in machinery and equipment, chemicals and plastics, forestry, and aerospace.
- Services, increasingly a key driver of Canadian exports, will also post back-to-back 5 per cent growth in the next two years.