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Export market to remain flat: EDC Economics

OTTAWA, Ont. -- Canadian exports will remain flat for two more years, according to a report by EDC Economics.

OTTAWA, Ont. — Canadian exports will remain flat for two more years, according to a report by EDC Economics.

The disappointing news comes on the heels of an overall flat 2006. The Global Export Forecast predicts a slowdown in global economic growth in 2007 to 4.5%. Economic growth will likely inch up to just 4.6% in 2008, the reports suggests.

The report says the US economy will grow just 2.1% in 2007, contributing to the overall global slowdown. However, with an expected upturn of the US economy in 2008, Canadian exports should rise gradually along with it, the report says.

The global economic slowdown should result in softer prices for base metals and oil which is not great news for Canadian exporters. Also impacting Canadian exports will be the strength of the dollar, which is expected to decline in value.

We are forecasting that the dollar will ease to US$0.83-US$0.84 cents by end-2007 and 82-83 cents by end 2008, EDC Economics reports. This means that Canadas economy will retain its two-track nature for the next two years, with the energy sector outperforming and manufacturing struggling.

Emerging markets appear to be where the action will be for exporters over the next couple of years, the report suggests. Exports to emerging markets are forecast to rise 9% in 2007 and 4% in 2008 while exports to major markets will remain flat. Commodities such as agri-foods, fertilizers, telecom and other machinery and equipment will lead Canadian exports. Meanwhile, forestry products, consumer goods and motor vehicles and parts will be on the decline, the report says.

The bottom line? The world economy is in good shape, and is forecast to remain so, concludes EDC Economics. But the combination of slower global economic growth, persistently high oil prices and a strong Canadian dollar will continue to weigh on Canadian exporters in 2007-08.

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