World economic growth will spur Canadian exports: EDC

After three years of little or no growth, Canadian export sales are poised to grow by 4% next year, according to the latest global export forecast released by Export Development Canada (EDC). “There are now signs that the global economy is back on track,” says EDC vice-president and chief economist Stephen Poloz. “Our view is that 2004 will be the first synchronized growth year for the world economy since 1996, the last time economic conditions were as close as possible to how we define normal.”
Economic activity is now strengthening in the U.S. and prospects for much of the developing world are also improving. EDC forecasts world economic growth of 3.9% next year, up from 3.1% expected for this year. Canada’s economy is expected to grow by 3.4% next year, building on the 2.2% growth estimated for this year.
While the value of energy exports will ease next year as prices gradually soften, non-energy exports should see a solid revival, led by agri-food, commodities and other key resource sectors such as forestry products, chemicals, plastics, fertilizers, ores and metals, according to EDC’s forecast. Other growth categories will include machinery and equipment, engineering services and consumer goods. Conditions will remain soft for the aerospace and auto sectors. Spearheading the recovery are the economies of non-Japan Asia, which together now make up about one quarter of the world economy. The U.S. economy is expected to see growth of about 4% in 2004.
Western Europe will see a modest recovery but will continue to lag the other major economies with growth of around 2% and Canadian export sales to markets within this region should grow between 5% and 10%. Central Europe and Russia will emerge as key growth regions and Canadian exports are expected to increase by 9%.
Next year will be a rebuilding year for South America and Canadian exporters should see growth of more than 20%.
“The world is back on track, and a return to normal business conditions is unfolding,” adds Poloz. “But the road will remain a bumpy one – normality is being redefined along the way, and its new defining characteristic is volatility.”