What’s in store for Canadian exporters in 2016? Twice a year, the Export Development Canada (EDC) economics team answers this question with its Global Export Forecast (GEF) – a detailed analysis of what export-minded Canadian companies can expect in the coming years.
The Spring 2016 edition of the GEF, released today, offers a promising outlook for this year and next. Strong demand for Canada’s manufacturing exports will lead to significant export growth in three major sectors: consumer goods with 14 per cent growth, aerospace rising by 13 per cent, and automotive exports increasing by 10 per cent.
U.S. economy is good news for exporters in non-resource sectors
The strengthening U.S. economy is good news for Canadian exporters, as it is driving much of this demand. With rising employment rates and wages, increased consumer spending, and new business investments, the U.S. will continue to be the top destination for Canadian exporters, particularly those in non-resource sectors. The positive forecast is also supported by a weaker Canadian dollar that provides exporters with a price advantage when selling to the U.S.
Energy and resource sector exports to rebound in 2017
Canada’s diverse economy will face some challenges this year as well. The report outlines that some sectors will continue to be under pressure, most notably with energy exports falling by 14 per cent due to ongoing weakness in crude and natural gas prices. Additionally, fertilizer exports will drop by five per cent, and chemicals and plastics are expected to fall by one per cent. These sectors are expected to rebound in 2017.
“The difficulties faced by Canada’s energy and resource exporters have lasted longer than most forecasters had expected because of continuing low energy prices and less robust growth in other parts of the world, but that should start to turn around in 2017,” says Peter Hall, EDC’s Chief Economist.
Provinces with strong manufacturing sectors are doing well
When looking across the country, the report forecasts that provinces with diverse economies and strong manufacturing sectors will perform well this year. Ontario is expected to see a seven per cent increase in its exports, with Quebec’s exports growing by five per cent. However, provinces that rely heavily on energy exports will see further declines this year. The report shows that Alberta’s exports are forecasted to drop 10 per cent, while Newfoundland and Labrador’s exports will be down 11 per cent. Both provinces are forecast to have much stronger exports in 2017, with higher energy prices and increased export volumes expected next year.
When it comes to exporting, the opportunities are out there
While volatility continues to prevail in some areas of the global economy, there are growth opportunities in many others. “There are a lot of great opportunities for Canadian exporters, even though lower prices for energy and other commodities have somewhat masked that good-news story,” says Hall. “Looking beyond the United States, there are several bright spots for Canadian exporters, particularly in Asian markets such as China and India. Both countries will have healthy growth of more than six per cent this year, but exporters need to be strategic about how best to take advantage of the opportunities those markets offer.”