Uncertainty on trade won’t hurt exports for Canada, EDC predicts
The value of Canadian exports will grow by six per cent this year despite ongoing uncertainty about trade protectionism and the future of the North American Free Trade Agreement, according to a new forecast.
In fact, in its twice-yearly outlook, Export Development Canada (EDC) predicts growth will be led by gains in three sectors — all the recent subjects of trade conflict with the United States: ores and metals, aerospace, and forestry.
“It’s a pure coincidence, but those are three sectors that are right in the protectionist crosshairs of the current administration in the United States,” said Peter Hall, chief economist at the EDC. “Different actions against them have been suspended, taken off the table or still exist and still, because of a variety of factors, they remain our three top sectors.”
Exports from the aerospace sector will reach $19 billion in 2018, up 16 per cent from 2017, according to the forecast. The growth will be driven by an expected shift toward higher value products, the EDC said.
The ores and metals sector, led by exports of nickel and aluminum — the latter a recent target of tariff threats from the U.S. — will grow by 13 per cent to $88 billion.
Lumber and forestry exports are expected to grow by 16 per cent to $39.4 billion in 2018, amid increased housing demand and rising prices south of the border — the result of the anti-dumping and countervailing duties imposed in the softwood lumber dispute. Supply in the sector has also been constrained, the EDC says, due to record wildfires in British Columbia. The uptick for forestry could be temporary however, in light of significant new investment in lumber mills in the Southern U.S. However, there remain plenty of reasons to be cautious about Canada’s export performance, said Doug Porter, chief economist at BMO Financial Group. When measured in volumes, Canada’s export levels over the past two years have grown at about one per cent annually, he said.
“There are some pockets of good news but, given where the global economy is, I’d have to characterize Canada’s export performance as disappointing,” Porter said. “Underlying the overall number, exports are grinding along at a pretty modest pace.”.