Canada poised to grow exports - If resources can be delivered to emerging markets

Nov 20, 2012, 09:19 ET from CONFERENCE BOARD OF CANADA

OTTAWA, Nov. 20, 2012 /CNW/ - While the United States will remain by far Canada's largest trading partner in 2025, fast-expanding emerging markets offer the greatest potential for export growth, according to a Conference Board of Canada analysis, What Might Canada's Future Exports Look Like?.

"An important shift is underway. Trade with the United States has not grown in real terms over the past decade. At the same time, Canada's trade with fast-growing markets elsewhere is taking off," said Kip Beckman, Principal Economist.

"The opportunities for growth offered by markets such as China, Brazil, Mexico and India could be diminished, however, if Canada's transportation infrastructure and ports cannot handle the demand for raw material exports."

Canada's goods exports to China soared from less than $3 billion in 1990 to $15 billion by 2011. Based on the assumptions of a Chinese average annual growth rate of close to seven per cent, Canadian exports are projected to hit the $45-billion mark by 2025. At that point, China's share of Canadian goods exports would increase to 6.8 per cent from three per cent at present.

The same pattern is visible in other fast-growing markets. The share of Canada's goods exports to India will more than double to 1.9 per cent of overall trade by  2025; exports to Mexico will also rise as a share of overall trade, from 1.2 per cent today to two per cent in 2025. Trade with Brazil will also double by 2025 to reach 1.3 per cent of overall Canadian exports.

In contrast, Canada's goods exports to the United States are projected to expand by about two per cent annually through 2025 on average, which is actually an improvement from the flat growth in volumes over the past decade. Nevertheless, the share of Canada's overall goods exports that go to the U.S. will drop from almost 75 per cent in 2010 to 68 per cent in 2025.

Assuming that the European Union can solve some of its current economic woes and the eurozone stays intact, merchandise exports from Canada to the eurozone are expected to expand at a modest pace. From a four per cent of share of Canada's exports at present, the EU could increase its share to 5.6 per cent by 2025.

Exports to the United Kingdom and Japan are forecast to decline as a share of Canada's exports, largely because of weak projections for economic growth in both economies. The UK share of goods exports is expected to fall from 2.9 per cent today to 1.9 per cent in 2025; Japan's share would drop from 2.3 per cent at present to 1.6 per cent by the end of the forecast period.

The briefing, What Might Canada's Future Exports Look Like? examines the potential long-term growth path for Canadian exports based on assumptions about future exchange rate movements and real growth in gross domestic product among Canada's major trading partners. The research is published by the Conference Board's Global Commerce Centre.

Formerly called the International Trade and Investment Centre, the newly-launched Global Commerce Centre provides evidence-based tools for Canadian companies to expand into global markets and for policy-makers to open doors to these markets. The Centre's research and tool-kit for going global identifies hot opportunities for Canadian companies in fast-growing markets, and best strategies to overcome barriers and succeed in fast-growing markets.