What’s in store for Canadian exporters in 2017? Twice a year, the Export Development Canada (EDC) economics team answers this question with its Global Export Forecast (GEF), a report that breaks down global economic trends and explains how they will impact Canadian exports for the next year.
That job became much more difficult in 2016, with impactful events such as Brexit and the election of Donald Trump creating uncertainty around what the future of Canadian trade might look like.
In the face of this adversity, however, the Fall 2016 GEF still offers a promising outlook for Canada in 2017. After a difficult year that saw exports stall, Canadian businesses can expect to see 3 per cent growth in exports of goods and services next year.
Top three points driving Canada’s growth in 2017:
1. Commodity prices to rebound in 2017
A modest increase in commodity prices is expected next year after hitting significant lows in 2016. A rebound in prices from such a low point – however modest that rebound is – is enough for the energy and metal ore sectors to register the largest growth rates in Canada next year. This is good news for Canada’s energy-rich provinces who will all recover from this year’s loss of exports. This good news was recently added to when Prime Minister Trudeau announced the approval of two new pipelines on November 29th.
EDC resources to help you export
2. The low Canadian dollar will persist
The Canadian dollar’s value will rise mildly in 2017 because of the increase in the price of oil and the improved performance of Canadian exports. That said, it is forecasted to experience volatility as the US Federal Reserve resumes its tightening cycle and as investors continue to pour money into US assets. While it is not an attractive fact to consumers, the low Canadian dollar provides exporters with a price advantage, which will help drive the growth in Canada’s economy next year.
3. Manufacturing sectors will maintain positive momentum
In comparison to commodity exports that are rebounding from all-time lows, some key manufacturing sectors are building on already strong growth registered in the past few years. Robust US demand and a subdued Canadian dollar will continue to boost these manufactured products, especially in the automotive, aerospace, and consumer goods sectors. While 2017 growth seems minimal, it is a continued success story for these industries.
Moving forward despite anti-trade rhetoric
A rebound in oil prices, a weak currency, and strong US demand are all signs of a growing Canadian economy next year. However, this outlook depends on anti-trade rhetoric not becoming a reality. Until then, it may be the best time for Canadian companies to take advantage of global opportunities that their foreign competitors might be abandoning