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Weekly Economic Letter

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U.S. investment: A boon for Canadian exports in 2010!

Tue, Nov 17 2009, 06:45 GMT
by Economic and Strategy Team

National Bank of Canada


Summary

  • Canadian exports have been the victim of a long and deep recession in the United States. Exports have fallen more than 20% in volume terms over the course of this downturn, backsliding for eight straight quarters since Q3 2007. This is the longest negative streak since at least 1960.

  • The United States being Canada’s most important trade partner, it comes as no surprise that the tide of Canadian exports is heavily influenced by the cyclical phases of U.S. domestic demand.

  • There are two main drivers of demand for Canadian exports: U.S. consumption and U.S. investment. U.S. consumption will add to Canadian exports growth but, owing to ongoing consumer deleveraging south of the border, its positive input will be more subdued.

  • However, U.S. investment spending is set to bounce back now and will have a significant positive impact on Canadian exports growth.

  • With the global economy recovering and U.S. economic growth next year projected at about 3.0%, Canadian exports should expand more than 4% in 2010.

Published on  Tue, Nov 17 2009, 06:45 GMT


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http://www.nbc.ca/ | info@nbc.ca

Legal disclaimer and risk disclosure

This presentation may contain certain forward-looking statements about the 2009 Economic and Financial Outlook. Such statements are subject to risk and uncertainties. Actual results may differ materially due to a variety of factors, including legislative or regulatory developments, competition, technological change and economic conditions in Canada, North America or internationally. These and other factors should be considered carefully and readers should not rely unduly on National Bank of Canada’s forward-looking statements. This presentation may not be reproduced in whole or in part, or further distributed or published or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express consent of National Bank.

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