U.S. recovery will be immediate boon for Canadian companies: EDC forecast

Nov. 7, 2014, Ottawa – The momentum of the coming U.S. recovery will
drive the next global growth cycle and benefit Canadian companies, says a forecast by Export Development Canada.

Nov. 7, 2014, Ottawa – The momentum of the coming U.S. recovery will
drive the next global growth cycle and benefit Canadian companies, says a forecast by Export Development Canada.

"U.S. consumers and businesses are back, and this is already
translating into solid Canadian export growth. Others aren't far behind.
U.S. growth will translate into higher activity in other OECD economies
and in emerging markets," said Peter Hall, chief economist for Export Development Canada (EDC), in a news release. "The driver is the U.S., and it is well-positioned to power up economies
that are in gear. It's all happening quickly, so for Canadian companies
active in trade, or even considering it, it's crucial for them to
ensure they're in gear too."

EDC's forecast for the U.S. economy is overall growth of 3.6
per cent in 2015, which is higher than most forecasts. The outlook notes
positive movements in consumer and corporate confidence as a key signal
that pent-up demand in the U.S. economy will continue driving growth
forward.

"If pent-up demand means that consumers and businesses now
have to get out there and spend, a second critical development means
that they now actually want to," explained Hall. "For the first time in
five years, confidence has staged a solid return to levels consistent
with sustained economic growth. In just over a year, indexes of both
consumer and business confidence have moved from recessionary levels
into the 'normal' zone."

The resurgent U.S. economy and the lower Canadian dollar have
already paid dividends to Canadian exporters. Real merchandise exports
are on an 8-month surge, and are currently up 12 per cent year-on-year.
This strong performance was also bolstered by the Eurozone importing
from Canada at a respectable rate, despite recent macro-economic
weakness. Canadian export growth is forecast to reach 11 per cent this
year and 6 per cent in 2015.

The forecast also noted that Canada's export growth spans a
wide variety of Canadian industries and extends across almost every
province, and is expected to be a boost to trade-related business
investment. This is the case despite expectation of persistent weakness
in commodity prices. As a result, tightening industrial capacity is
expected to lead to significant expansion decisions. In spite of weaker
domestic performance, Canada's GDP growth is forecast to accelerate to
2.8 per cent next year, largely thanks to trade.

"Add it all up, and it comes to 4 per cent global growth in
2015, up from 3.2 per cent this year. It's good news for Canadian
companies, but it doesn't guarantee growth; that depends on a lot of
additional factors," added Hall. "Fortunately, there's good news on this
front. Recent weakness of the Canadian dollar is likely to persist. All
in all, a positive picture for Canadian companies exporting to the
U.S., and in short order, the rest of the world."

EDC's forecast calls for the Canadian dollar to hover in the low-US-90-cent level for the next two years.