Canada’s export development agency says pent up demand and a stronger U.S. economy should finally help reboot the country’s critical export sector.
Export Development Canada says in its spring forecast that shipments will rebound to nine per cent this year, after a disappointing 1.9% gain in 2012.
Last year saw most economic indicators fall off, not just exports of Canadian-made goods, but the EDC says despite the slow start to the year, the global and U.S. economies are bouncing back.
It notes that although the forecast for U.S. growth is modest at 2.3%, that’s including an about two per cent drag from government austerity. Private sector growth will actually top four per cent, which will be good news for Canadian exporters of wood products, autos, parts and other consumer goods.
EDC chief economist Peter Hall said the exports rebound is about a year behind schedule and has been interrupted by the turmoil following the Greek elections last spring and the U.S. fiscal cliff worries at the end of the 2012.
But confidence is beginning to return, he said, especially in the U.S., which will boost activity in Canada.
“Quietly, amid the gloom, a different story has been building,” he said. “Lending activity is improving, bond markets spreads are narrowing nearly everywhere. There’s even evidence of ‘fright fatigue,’ a sign of confidence in the policy responses to successive panic points.”
The EDC is among the most bullish about Canada’s economy this year, pencilling in an above-consensus 2.2 growth rate.
The Crown corporation, which offers advice and financing for Canadian exporters, predicts a more modest year for 2014, with the economy advancing by 1.9% and exports growing by five per cent.