FINANCIAL POST EXPERTS SHARE THEIR FORECASTS FOR THE YEAR AHEAD.
OUTLOOK TRUMP, KXL PIPELINE FUTURE IS GOOD; MORNEAU, TRANS MOUNTAIN, NOT SO SURE
As Donald Trump told reporters on Tuesday afternoon he’d beat Oprah Winfrey if she runs against him in 2020, Canadian pundits and experts made their own predictions about the year ahead at the National Post and Canadian Club Toronto’s annual Outlook Luncheon.
They mulled over t he political futures for Trump, Ontario Premier Kathleen Wynne and federal Finance Minister Bill Morneau. When it comes to the economy, the North American Free Trade Agreement and pipelines dominated a cautiously optimistic conversation. Here’s what they predict for 2018:
TRUMP IS MORE BARK THAN BITE
J. F. Perrault, Scotiabank senior vice- president and chief economist Trump will continue to be more of a distraction than an actual threat to the economy, Perrault predicted.
“It’s easy to worry, it’s easy to think there’s going to be war in Korea, NAFTA’s getting ripped up, corporate tax reform is going to be terrible for Canada,” he said. “In reality, as we’ve experienced over the last year … a lot of this really isn’t impacting us to the extent we thought it would. We had a really good year.”
Canada has suffered from uncertainty around NAFTA — its future is the No. 1 risk factor to the country’s eco- nomic performance — but should be fine no matter what happens given half of trade with the U. S. is done outside of NAFTA, Perrault said.
He’s also “reasonably sanguine” about the corporate tax cut in the U. S., adding corporate tax rates don’t matter nearly as much as economic fundamentals that continue to be strong.
“Generally what’s good for the U.S. is good for Canada.”
He predicted the Bank of Canada interest rate will be 75 basis points higher at this time next year.
‘ENTITLED RICH KID ’ OPTICS AND PIPELINE POLITICS
Andrew Coyne, National Post columnist The controversial expansion of Kinder Morgan’s Trans Mountain pipeline from Alberta to B.C. will come to a head, Coyne predicted.
“It’s going to be from all appearances a knock- down, drag-’em- off fight,” he said, with environmentalists apparently prepared to physically block construction.
This leaves the Liberals with a balancing act between pipelines proponents and environmentalists. If Prime Minister Justin Trudeau “sticks to his guns and gets it built,” that could change the way voters in Alberta and Saskatchewan see the Liberal party, Coyne said.
Coyne said that Trump will still be president at this time next year, but the same doesn’t stand for Canada’s finance minister.
“I suspect he may be gone in a year,” he said of Bill Morneau.
Morneau can’t seem to shake the scandal over muddled small- business tax reform. The Liberals and Trudeau are vulnerable when it comes to the “entitled rich kid thing,” Coyne said, and Morneau is a constant reminder of that.
But Coyne wouldn’t make the same prediction about the Ontario Liberals in a provincial election year. While the Liberals have earned a spot in opposition, he said, Wynne has thrown “everything but the kitchen sink” at voters including rent control and a minimumwage hike. Plus, he said, “The Conservatives have a history of finding ways to beat themselves.”
NAF TA WI L L B E ‘JUST FINE ’
Diane Francis, Financial Post columnist Canada should forget about incorporating Mexico into NAFTA and focus on a separate trade deal with the U. S., Francis said.
Trump is a protectionist, but he largely means Mexico when he says he wants to get rid of NAFTA, she said.
“The strategy in Ottawa to side with Mexico is beyond foolish, it’s actually dangerous,” she said.
Either way, she added, much of the business between Canada and the U. S. doesn’t involve NAFTA and is done through inter- corporate transfers. The relationship is long- standing and critical for parties on both sides of the border.
“I think the NAFTA thing will work out and Canada will be just fine,” she said.
FIRST NATIONS A ‘GAME CHANGER’
Claudia Cattaneo, National Post Western business columnist The “one good thing” Trump did last year was approve the Keystone XL pipeline, but the Nebraska commission’s decision to re-route the pipeline will make it difficult to get built, Cattaneo predicted.
“I think Keystone will go ahead but it’s going to be a fight every step of the way,” she said.
Cattaneo expects this will be a big lift for the Western economy and a political win for Trudeau and Alberta Premier Rachel Notley, both of whom could use a boost in Alberta.
When it comes to NAFTA, Cattaneo said Alberta is already thinking beyond the agreement given its resource economy is “way too dependent on the U. S. market.” “That’s why there’s a real push to get to Asia,” she said, pointing to the Trans Mountain pipeline.
She expects oil prices to increase globally, though that won’t solve Alberta’s oil transportation problem. But she expects the game changer this year will come from First Nations.
“I think we’re going to see them become supportive of projects as opposed to opponents.”
TRUMP ’S IN, BITCOIN ’S OUT
Amanda Lang, business journalist and author Donald Trump will still be president at this time next year, whatever may come from the Mueller investigation into Russian interference in the 2016 U. S. election, Lang predicted.
“But I think he will have a fight. There will be a real challenge to his presidency,” she said.
The stock market’s enduring rise is “long in the tooth” and will inevitably correct at some point, Lang said. But she wouldn’t pinpoint when she expects the fall given the uncertainty from U. S. tax reform, which could prolong the market’s hot streak.
When it comes to Bitcoin, however, Lang didn’t pause before comparing it to the i nternet stock bubble in 1999.
“It’s an overvalued flash in the pan,” she said. It has some seriously important underlying technology, she added, but as an investment has “zero fundamentals.”