[xtypo_dropcap]C[/xtypo_dropcap]anadian exports, traditionally linked closely to U.S. economic growth, are lagging behind as the loonie fluctuates near parity with the U.S. dollar and Canadian exporters continue to target American consumers while U.S. exports focus on emerging markets, notes a recent report.
“Quarterly U.S. exports have regained virtually all of the ground lost during the recession” while “Canada’s real exports are still 15 percent below their pre-recession peak,” stated the Global Position Strategies report by CIBC World Markets.
This is in part due to the fact that corporate America is stepping up its push toward exporting to emerging economies like India and Brazil, which are buying up “made in America” products.
“The contrasting recoveries reflect different export focuses north and south of the border,” the report said.
“[U.S.] exports to emerging markets have been consistently outpacing American shipments to industrialized trading partners like Canada, Europe and Japan. The capital spending by corporate America to meet those needs has also been ramping up sharply.”
Since 1995, the growth of major emerging markets has consistently outperformed that of developed economies, noted the report.
It said that Canadian manufacturers should look for ways to integrate into the American supply chains “for goods destined for the faster growing demand in the emerging markets.”
“Ottawa policymakers are now looking for alternatives to debt-financed housing consumption and government spending as drivers of growth,” stated the report.
It added that Bank of Canada’s Governor Carney “would like to see the recovery fed more by business investment spending, which has picked up of late, and exports.”
However, “shaping policy to steer the economy on that path will be a delicate exercise,” the report said. ”Canada’s role in emerging markets remains trivial relative to its U.S.-bound exports, although the prices for those in the resource sector are enhanced by developing-country growth.”
Canadian lumber and automotive export growth will remain stagnant until America’s demand picks up, but with current U.S. unemployment rates at 9.8 percent it will be some time before American housing starts and auto sales—traditional drivers of Canadian exports south of the border—go back to pre-recession levels.
In the report, Avery Shenfeld, CIBC’s Chief Economist, forecasts Canada’s 2011 GDP at 2.2 percent and the U.S. 2011 GDP at 2.4 percent.
“Quarterly U.S. exports have regained virtually all of the ground lost during the recession” while “Canada’s real exports are still 15 percent below their pre-recession peak,” stated the Global Position Strategies report by CIBC World Markets.
This is in part due to the fact that corporate America is stepping up its push toward exporting to emerging economies like India and Brazil, which are buying up “made in America” products.
“The contrasting recoveries reflect different export focuses north and south of the border,” the report said.
“[U.S.] exports to emerging markets have been consistently outpacing American shipments to industrialized trading partners like Canada, Europe and Japan. The capital spending by corporate America to meet those needs has also been ramping up sharply.”
Since 1995, the growth of major emerging markets has consistently outperformed that of developed economies, noted the report.
It said that Canadian manufacturers should look for ways to integrate into the American supply chains “for goods destined for the faster growing demand in the emerging markets.”
“Ottawa policymakers are now looking for alternatives to debt-financed housing consumption and government spending as drivers of growth,” stated the report.
It added that Bank of Canada’s Governor Carney “would like to see the recovery fed more by business investment spending, which has picked up of late, and exports.”
However, “shaping policy to steer the economy on that path will be a delicate exercise,” the report said. ”Canada’s role in emerging markets remains trivial relative to its U.S.-bound exports, although the prices for those in the resource sector are enhanced by developing-country growth.”
Canadian lumber and automotive export growth will remain stagnant until America’s demand picks up, but with current U.S. unemployment rates at 9.8 percent it will be some time before American housing starts and auto sales—traditional drivers of Canadian exports south of the border—go back to pre-recession levels.
In the report, Avery Shenfeld, CIBC’s Chief Economist, forecasts Canada’s 2011 GDP at 2.2 percent and the U.S. 2011 GDP at 2.4 percent.
