OTTAWA — Canada’s richness in resources allowed our economy to hurdle over a slumping U.S. market and other obstacles to steady growth in 2007, according to Stats Canada’s latest study in the Canadian Economic Observer.

The report says “Canada defied the conventional wisdom” by not being dragged down by the U.S. economy and the credit squeeze in global financial markets.

Real GDP growth of 2.7 percent in Canada was barely affected by the slowdown in the United States, where GDP growth eased from 2.9 percent in 2006 to 2.2 percent last year. This was the first year growth in Canada surpassed the United States since early this decade.

“Canada’s steady growth last year sheds some light on the recent debate about how much Canada can ‘decouple’ from the US economy,” says Statscan.
To date, the slowdown in the United States has been largely confined to housing and autos. As a result, while Canada’s export earnings from forestry and auto products tumbled by 13 percent and 6 percent respectively, total exports continued to grow modestly for the fourth year in a row.

The overall gain in our exports in 2007 was driven by commodities, notably industrial goods, agriculture and energy, which accounted for exactly half of exports last year. Prices for these goods remained buoyant on world markets, as rising demand from emerging nations more than offset the weakness in the U.S.

Manufacturing Restructures:

Manufacturing sales by industry in 2007 showed almost exactly the same patterns, up or down, as seen on balance since 2002. Clothing, forestry products and autos all continued to post large declines, while small drops were seen for printing, beverages and tobacco, rubber and plastic, and computers and electronics.

These losses were offset by rapid growth for petroleum, primary metals, aerospace, machinery, metal fabricating, non-metallic minerals and chemicals. Food, furniture and miscellaneous manufacturers contributed modest gains.

Regional Differences Narrow:

“It has become commonplace in recent years to characterize Canada as divided between a booming resource economy in the West and a slumping manufacturing sector in the East,” says the report. “In 2007, this was more a falsification than a simplification.”

Regional differences in job growth were less pronounced than in recent years. For the first time since 2004, every province posted higher employment, with Alberta leading with a 4.7 percent gain.