GHY Tradelines

(CBC News)

Stephen Poloz, the head of Export Development Canada, has been named as the surprise pick to be the next governor of the Bank of Canada. Poloz, who has experience in both the public and private sector, replaces Mark Carney, who is leaving his post to lead the Bank of England.

At a Thursday afternoon press conference in Ottawa, Minister of Finance Jim Flaherty said the search for the new governor was extremely thorough and sought out candidates from around the world. “It has taken us some time to get to this point,” Flaherty said, adding that the appointment process was scrupulously followed. Flaherty said he is confident Poloz will perform with “distinction” as he guides the Bank of Canada for the next seven years. Read more here.
 

(EDC via CNW)

Pent-up demand is reappearing in key economic indicators following 4 years of sluggish global performance, setting the stage for an acceleration in world growth, according to a Global Export Forecast by Export Development Canada (EDC).

“Shaking off the memories of recent growth crashes, some as spectacular as they get, will be tough,” said Peter Hall, Chief Economist, EDC. “But as the race gets going and the adrenaline kicks in, economies may even surprise themselves with their renewed performance. The acceleration will lift the world economy by 3.6% this year, and 4.2% in 2014. It looks like this time, the race is on.”

“Canadian growth will soon require some fancy gear-changing, and it will be up to trade to shore up the bottom line as the domestic economy slows. It won’t disappoint,” said Mr. Hall. “Exports will leave last year’s modest growth in the dust, rising 8% this year and an additional 5% in 2014, benefiting from the resurgence in our largest trading partner, the U.S.” Read more here.

Related: EDC Dials Back View on U.S. Economy (Globe & Mail)
 

(EDC)

The African Trade Insurance Agency (ATI) and Export Development Canada (EDC) today announced an agreement to work together more closely in the future towards creating new trade opportunities between Canada and ATI member states.

The Memorandum of Understanding (MOU) aims to provide financial -products and services to facilitate trade and foreign direct investment between Africa and Canada.

“ATI’s preferential position and knowledge in some of the more challenging African markets makes them a partner of choice for EDC in transactions involving both private and sovereign risk,” said Patricia Bentolila, Chief Representative, Africa, EDC.

“Africa holds many markets whose significant potential matches up very well with Canadian expertise that can help African companies and economies execute upon that potential. A partner like ATI will be a catalyst to help reduce the business risks of those matchups and cost of doing business in Africa.” Read more here.
 

(Canada Newswire)

Alberta’s international exports are forecast to grow by 7% this year and 6% in 2013, surpassing CAD 100 billion next year, according to the Global Export Forecast released today by Export Development Canada (EDC).

“Peak prices for oil and key commodities have been boosting the value of Alberta’s exports for a number of years, but additional gains will be somewhat constrained by softening prices. Increased volumes, however, will keep the province on the growth track,” said Peter Hall, Chief Economist of EDC.

Alberta exports are dominated by the energy sector, which accounts for three quarters of total annual sales. Energy exports are forecast to rise 8% in 2012 and 5% in 2013, despite a weaker price environment. Read more here.
 

(The Globe and Mail – Kevin Carmichael)

When it comes to the BRICs, Canada kind of missed the boat.

According to calculations by Peter Hall, the chief economist at Export Development Canada, Canada’s share of Brazilian imports was 2.1% in 1990, 1.9% in 2000 and 1.5% in 2010.

That pattern is the same in the other big emerging markets.

Russia: 3.1% of imports in 1992; 0.6% in 2000; and 0.6% in 2010.

India: 1.3% in 1990; 0.8% in 2000; 0.6% in 2010.

China: 2.8% in 1990; 1.7% in 2000; 1.1% in 2010.

This isn’t an entirely negative story. In absolute terms, Canada’s exports to those countries rose over the past couple of decades. That brought more money back home.  There also was more competition in global markets as those countries and others muscled in for a bigger share of international trade. Read more here.
 

(EDC)

Export Development Canada (EDC)… announced that is has parlayed the success of its annual Canadians at Work: 50 International Infrastructure Projects publication into a new online resource for Canadian companies.

“Connecting Canadian companies to global infrastructure projects, and to other Canadian companies already involved in them, is another opportunity to help create trade opportunities for Canada’s infrastructure sector,” said Francoise Faverjon-Fortin, Vice-President, Infrastructure and Environment, EDC.

EDC developed the site to deliver three key benefits for Canadian companies:

• First, companies can register their projects online, giving them international exposure in the infrastructure sector.
• Second, companies can be alerted to new opportunities being presented to EDC and DFAIT through local networks around the world.
• Third, companies can research and learn about other Canadian companies in the infrastructure sector, allowing for information-sharing and networking opportunities.

As Canadian companies register their companies and their projects online, the website will evolve and expand its network. More than four new projects will be posted monthly, as will a feature article discussing a specific area of Canadian innovation or expertise in the infrastructure sector.

“Enhancing the ability of Canadian companies to identify and facilitate new partnerships is an important part of tapping into global supply chains, particularly in the infrastructure sector,” said Ms. Faverjon-Fortin. “The website will help showcasing Canadian expertise and innovation towards these ends.”
 

(Financial Post – Kim Covert)

Ontario will be at the forefront of Canada’s “outstanding” export momentum as manufacturing – particularly in the auto sector – rebounds this year, according to Export Development Canada.

In its semi-annual Global Export Forecast, released Thursday, Canada’s export credit agency said Ontario’s exports will grow by 9.4% in both 2012 and 2013, beating the national average both years.

“Thus far, things are looking good for trade” in Canada, says the EDC report. “Export momentum is outstanding — merchandise exports are already up 5.3% over last year’s levels, and any further growth this year will move the figure higher.” Read more here.
 

(EDC)

A new forecast by Export Development Canada (EDC) is focusing on the substantial, trade-driven growth that is currently being obscured within the popular ‘new normal’ narrative.

“Years of sluggish growth have convinced us that weakness is here to stay, especially in light of the significant public spending cuts around the globe. This ‘new normal’ thinking is masking a very good business story,” said Peter Hall, Chief Economist, EDC.

“The public fiscal drag is costing the world’s advanced economies 1.2% of GDP this year and next, a huge hit to growth, but it also means that there is a faster-growing side of the economy that’s keeping world output increasing. That growth is coming from the private sector in the U.S. and fast-paced emerging markets, and that’s the space that Canadian exporters play in.”

EDC forecasts that the Canadian economy will grow by 2% in 2012 and a slightly better 2.2% in 2013. Canada’s trade with the rest of the world is the key driver of the outlook.

“It may not look great on the surface, but behind what many are calling “new normal” growth is a faster-paced global economy, full of opportunity,” said Mr. Hall. “So far, things are looking good for Canadian trade, and export momentum is outstanding.”

All told, Canadian exports are projected to rise 7.1% this year and 7.3% in 2013, following 10.8% growth in 2011. EDC believes that all of Canada’s regions and the bulk of its broad industry sectors will participate in this good-news story.

EDC’s forecast notes that Canadian merchandise exports are already up 5.3% over last year’s levels, and any further growth this year will move the figure even higher. An important part of EDC’s forecast is the analysis of the American economy, Canada’s largest trading partner. The forecast suggests that U.S. economic momentum will spur growth ahead for Canadian exporters in a wide sweep of industries.

EDC predicts that the U.S. economy will rise 3% next year, even as fiscal contraction takes 1.3% away from GDP growth. The forecast implies an underlying rate of private-sector, business-driven growth that looks much more like a true recovery.

Canadian exporters will also benefit from continued diversification of sales into fast-growing emerging markets. Emerging market export growth will be broadly-based across global regions, but the hot spot will be Emerging Asia with 13% growth this year and 16.6 % growth in 2013.

“We see a real, sustainable recovery beginning toward the close of 2012,” said Mr. Hall. “Canada stands to benefit for a number of reasons, but our greatest challenge may well be finding the capacity to accommodate the growth coming our way.”

EDC’s semi-annual Global Export Forecast addresses the latest global export conditions including perspectives on interest rates, exchange rates as well as export strategies to help Canadian companies minimize risk. It also analyzes a range of risks for which exporters should be prepared. The forecast is available on EDC’s website.
 

(Derek Lothian — CME)

The Canadian Manufacturers & Exporters trade group has prepared a summary of highlights from the 2012 Federal Budget with potential impact on its members. The following measures are included in the “International Trade” section:

• Extended domestic financing powers for EDC (one year)

• Refresh the global commerce strategy – consultations with industry in 2012

• Implement the Canada-U.S. Border and Regulatory Action Plans

• Trade measures to support energy industry: duty-free status of imported fuels used in manufacturing (current duty of 5% on certain items)

• Consolidation of Canada’s trade remedy investigation functions into one organization, under the Canadian International Trade Tribunal

The complete summary of CME Budget highlights can be viewed here.
 

(Export Development Canada – Peter G. Hall)

For all its oft-repeated recession-resilience, China’s economy is slowing. Forecasts are fading fast, the latest coming from China’s leaders themselves. On Monday at the National People’s Congress, Chinese Premier Wen Jiabao lowered the 2012 growth target to 7.5%, a half-point below both the long-standing official target and EDC’s current forecast. Is it tranquilizer time again?

One look at recent GDP data, and the deceleration looks very gradual. Since the final quarter of 2010, year-to-year growth has edged down from 9.8% to 8.9% in the final three months of 2011. At face value, that’s still an impressive number. Trouble is, it embodies a lot of stuff that happened over the course of the whole year. More recent numbers are less certain, with annualized growth in the 8-9% range. Even so, the numbers square well with official targets, and remain strong. Read more or watch the video here.
 

(Export Development Canada – Peter G. Hall)

Opinions on Canadian international trade are many and varied. Exports and international investments were battered by the global recession, and have struggled to make a comeback. But overall growth was very slow before the recession, thanks to weak US sales. Count firms that export, and you’ll find the number has tumbled. Yet trade growth is expected to lead the Canadian economy forward, with supercharged trade to non-traditional markets leading the way. What do we make of these views?

Some of Canada’s setbacks are shared by all trading nations. Others are unique to Canada, and it is these that are more critical. As such, understanding Canada’s position relative to the rest of the world is critical, especially given global turbulence. At first glance, the numbers look bad. Canada’s share of global trade declined from 4% in 2000 to 2.8% in 2010. Is there a good explanation for this, or does it confirm that our position on the global trade stage is declining? Read more or watch the video here.
 

(Canada-Asia News – EDC)

Export Development Canada (EDC) announced that it has provided US$100 million in financing to India’s Tata Motors Limited (TML) to support procurement from Canadian companies within the greater TML family of companies.

EDC also announced the signing of an agreement with the China Development Bank Corporation (CDB) to identify projects between Chinese and Canadian companies that could be facilitated through partnered financing. Under the agreement, EDC and CDB will focus on key sectors including transportation and aerospace, but will also encompass the machinery, energy, mining, and green technology sectors.
 

(Export Development Canada – Peter G. Hall)

Data is normally the analyst’s best friend. Add a dollop of volatility, and it can fast become a foe. Data’s wacky wanderings of late have foiled many a forecast and contributed to an exaggerated, widespread sense of unease. International trade data were no exception, volatile right through the end of 2011. Do they give any hints of where global trade activity is headed this year?

Price movements are part of the turbulence. Although they matter deeply, prices can distort the real flows of goods and services that are occurring. Net of price fluctuations, the latest trade activity compared with the same point last year is still generally robust worldwide, with the exception of Europe. Cumulative numbers for 2011 compared with 2010 are far more impressive, up 6.2% with Central and Eastern Europe, Asia and the US leading the charge. So far, so good.

Given this picture, what do we make of scary press reports and the global fear-factor? Recent worries are in part a reaction to recent figures. Data toward year-end soured considerably, down 3.8% at annual rates in the final quarter, with one month of data pending. This is a significant setback, and has all but snuffed out export momentum heading into the New Year. Built-in growth heading in to 2012 is just 0.3%, compared with 3.9% at the same time last year. Troubling indeed. Read more here.
 

(Export Development Canada – Peter G. Hall)

We’ve had a fair amount of time to think about a topic that surfaced before recession hit us just over three years ago. The end of globalisation is still being discussed, and the longer the world battles meagre growth, the more intense the conversation is likely to become. But does that suggest any particular outcome – is the fabric of international commerce really coming apart at the seams?

Multiple arguments for the end of globalisation have been made. Neo-protectionism in the early days of the recession was perhaps the most compelling argument. Fears of financial market contagion led to talk of more subtle regulatory forms of protectionism. Supply-chain risk – highlighted by last year’s devastating natural disasters – prompted re-thinking of the current globalisation model. Fears that globalisation is responsible for widening income disparity continues to feed globo-skepticism. And then there’s the sustainability argument: globalisation leads to sky-high commodity prices, which makes international shipment too expensive, leading to neo-localisation of commerce.

Data argue against globalisation’s demise. Global exports are up 6.5% through last October, almost double our projected world GDP growth for the year. Recent performance is uneven, but there are more regional zones that are well into the black than otherwise. Foreign investment has not been as promising, but as it typically lags the cycle, it is too early to pick on this indicator. Read more or watch the video here.
 

(Dow Jones Newswires-WSJ)

Canada’s export sector is expected to remain resilient in 2012 in large part due to increased momentum in the U.S. economy, which is set to power global economic growth and offset weakness in Europe and emerging markets, says the country’s export-credit agency.

Export Development Canada, in an update to its fall forecast, said risks still abound – from Europe’s financial strains, which would “scar” global growth, to increased geopolitical turmoil linked to Iran – and, as a result, has downgraded its global outlook. Nevertheless, recent momentum in the U.S. economy looks sustainable and will provide a jolt the global economy needs, said EDC’s chief economist, Peter Hall.

“Our real point is the U.S. is taking the clear lead here, breaking away from what’s happening in other economies,” Hall said in an interview. “The U.S. has the wherewithal to go it alone and charge ahead.”

EDC forecasts global growth to hit 3.7% in 2012, down from its previous forecast of 4.3% issued in October. This is due in large part due to a ratcheting down of growth prospects in Europe, to a meagre 0.4% expansion from its previous call for 1.6% growth. Canada is set to post 2% economic growth, from the original 2.3% projection. Read more here.
 

(CTV News – The Canadian Press)

Canadian exporters have become almost as pessimistic as they were before the recession about their prospects for sales amid weakening global markets, Export Development Canada says.

The Crown corporation’s latest semi-annual survey of exporters and investors, released Thursday morning, shows confidence levels tumbling 12% to the 67 mark.

That’s only the second time in a decade the index has dropped more than 10% in one poll, and the new confidence reading puts it in the neighbourhood of the 61 recorded in the fall of 2008, when the world was entering the so-called Great Recession.

“Canadian exporters appear frustrated by the uncertainty in the global economy and the world’s markets,” said Peter Hall, the EDC’s chief economist, in a release.

“The absence of clear economic direction leads to a state of heightened tension where even the smallest nudge can trigger an irrational over-response. We believe that’s what the survey is telling us.” Read more here.
 

(Jeremy Torobin — The Globe and Mail)

The global economy and the climate for Canadian exports both stand to be better over the next couple of years than many analysts expect, as long as nervousness and fear don’t get in the way, a new forecast from Canada’s export-financing agency suggests.

Using Depression-era economist John Maynard Keynes’s famous term “animal spirits” to describe how the bumpy recovery of the past two years has made investors, consumers and executives so nervous about the future that their fear and inertia risks undermining the rebound, the forecast by Export Development Canada urges all to focus on the positive.

“Animal spirits pose a huge threat to short-term global growth,” Peter Hall, chief economist at Export Development Canada, says in the forecast, released Monday. “Our research suggests that rising momentum in key leading sectors, and the healing process that is definitely under way, will bring the global economy into a greater state of balance by the latter half of 2012.”

EDC’s forecast is somewhat more optimistic than most, including one released last week by the Bank of Canada, which cut its projections for both years and said Europe’s debt woes, the grinding U.S. rebound and a slowdown in China would limit Canada’s prospects. Read more here.
 

(The Canadian Press – Julian Beltrame)

Canada’s key export sector is poised to once again become the backbone of the economy, especially if companies can exploit emerging markets, says the government agency devoted to foreign sales.

Export Development Canada’s latest forecast says exporters are well under way to recovering the massive losses sustained during the recession, which hurt the sector more than any other. With growth rates of 10.4% in 2010, an expected 12% this year and a further seven% in 2012, exports are already tapped to be a main contributor to growth in Canada over the next two years.

Most industries will take part in the rebound, including autos and auto parts, aerospace and forestry, along with current mainstays in the resource sector.

But it is in the outgoing years – and in the fast-growing emerging markets – where EDC chief economist Peter Hall sees the biggest potential for the sector that a decade ago represented 46% of the economy. It is now down to 29%. Read more here.

(Reuters – Louise Egan)

Canada’s exports will grow 12% this year and return to pre-recession levels by next year thanks to momentum in the U.S. economy, the country’s export credit agency forecast on Tuesday. Export Development Canada (EDC) predicted in a report that a “sustainable recovery” in exports would begin in earnest in the first quarter of 2012. “Unlike the false start we experienced in late 2009 and early 2010, this time growth will be anchored in firmer fundamentals,” EDC’s chief economist Peter Hall said.

Canada, the top supplier of energy to the United States, saw a quarter of its exports wiped out by the global recession. The plunge in U.S. sales, combined with headwinds from a strong Canadian dollar, has given new impetus to a perennial debate on the need to reduce U.S. reliance and diversify markets. Read more here.

(Export Development Canada – Peter G. Hall)

Losing 20% of anything you value is not fun. Whether it’s crops, staff members in your company, life savings or lunch money, the loss hurts. Recession stung the world by carving more than 20% from global exports. But after a two-year climb, export activity finally closed that gap in December 2010. Are all regions sharing in the rebound, or has it created clear winners and losers?

With few exceptions, the collapse in global exports was evenly distributed. Advanced economies fell 23% from peak to trough, while emerging economies weren’t far behind, registering a 19% tumble. Japan stood out, with a stunning 42% drop, while Latin America was down just 16%. All other regions were close to average. It’s perhaps a surprising result, given widespread talk about the relative strengths of different markets. Have relative strengths been more obvious in the rebound phase?

At first glance, export numbers seem skewed. Advanced economies are up 22% from the trough, and collectively remain 6% below the previous peak of export activity. At the same time, emerging economies surged by 37%, thanks to a 47% rise in Asia. But as in the downturn, Asia’s numbers were likely influenced by Japan’s offbeat 61% growth performance, and China’s continued increases in global market share. Asia’s pace is impressive, but probably not sustainable beyond the recovery. Read more or watch the video here.