Pent-Up Demand, Confidence Fuel Global Growth
OTTAWA – Busines – “Global growth is being stoked by two key drivers: a groundswell of pent-up demand and the return of a long-lost friend: confidence,” explained Peter Hall, Chief Economist at EDC. Conditions are already ripe for decent Canadian export growth. The loonie is weakening, our dominant export market is leading the global growth story, key leading exports are already surging, and demand for resources remains strong”.
A new forecast by Export Development Canada (EDC), the country’s leading financier and insurer of exporting companies, predicts that the world’s economy has finally found its feet in a sustainable manner, setting the stage for the next global economic growth cycle.
Building global demand and generating economic benefit for Northwestern Ontario were also the subject of the Thunder Bay Immigration Forum hosted by the Thunder Bay Multicultural Association.
EDC forecasts that Canada’s exports will rise 5.3 per cent in 2014 following a 4.4 per cent increase this year, with the forestry, aircraft and machinery industries faring well.
The forecast is taking its cues from key indicators that cut across a broad swath of regions and industries in the developed world. The OECD leading indicator now boasts twelve successive monthly increases. Japan recently posted a six-month run of GDP growth that is stoking optimism in their trading partners. The EU has recently broken out of its six-quarter recession.
Mr. Hall, a longtime US bull, emphasized that the US is the furthest along the recovery road, and that government fiscal drag has been masking strong private-sector success. He suggested that the US housing market is an excellent, but not isolated, example of broader pent-up demand following five lean years of working off excesses.
The forecast also suggests that the near-global surge of confidence is a catalytic sign of sustainable recovery. “Confidence is an element that crisis robbed from the economy for an unusually drawn-out period, but it’s now back in a big way,” Mr. Hall added.
“Confidence is rising in, of all places, Japan and Europe, and in the US after three failed post-crisis attempts. US confidence has conclusively burst out of an extremely rare four-and-a-half-year recessionary funk. We believe this could be the conclusive push that will give global commercial activity the biggest lift it has seen since 2007.”
EDC projects global growth to increase to 3.9 per cent in 2014, a solid step toward a sustained new growth cycle following two years of 3.2 per cent growth. For the first time in a long while, industrialized markets are forecast to contribute more to world GDP growth than the emerging world. Led by the US, industrialized markets will almost double this year’s growth in 2014, notching up an increase of 2.3 per cent.
“The path to more sustained growth will not likely be smooth, but as in all recovery periods, growth is more than likely to surprise on the upside,” said Mr, Hall.” We believe it’s here and here to stay. Is your company ready to start running?”
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: GEF Forecast.