On the heels of the Central Bank’s revised economic forecast comes another disappointing report.
According to Export Development Canada’s (EDC) Autumn 2010 Global Export Forecast, released today, EDC forecasts that after generating growth of 4.2 per cent this year, the world economy will expand by a slower 3.9 per cent in 2011.
“Slower growth has taken the world by surprise; the sharp, six-month rebound that began a year ago persuaded many that recovery was in full swing,” said EDC Chief Economist Peter Hall.
“The global economy got very quiet out there mid-way through this year, and it’s going to be weak for some time. Recovery is still at least a year away, and navigating though this period will be challenging – a moment of truth for the world economy.”
The weakness will be most obvious in developed economies, where EDC expects growth to reach 2.4 per cent growth in 2010 before sliding to 2.1 per cent in 2011. With few exceptions, EDC expects emerging markets to share in the current weakness, but with growth still ahead of average at 6.4 per cent this year and 5.9 per cent in 2011.
Mr. Hall cautioned that there are four key drivers to global demand that will challenge short-term growth strategies:
• big-market consumers, a huge source of global demand, are generally quite nervous. They are already busy paying down swollen debt loads, but could weaken demand further by being frightened into more excessive thrift.
• stimulus exhausted most of the available policy ammunition. There are key doubts about both the affordability and the actual impact of augmented stimulus.
• financial institutions remain reticent about lending, a key ingredient to economic growth.
• slower growth is weighing down key emerging markets that thus far have buoyed overall demand.
“At first blush, the global forecast numbers don’t look bad at all, but in actual fact they mask the weakening we are currently witnessing,” said Hall.
“Growth for 2010 is largely behind us. The impressive back-to-back increases in GDP that began in the fourth quarter of 2009 account for the bulk of the 2010 growth, while the 2011 forecast is rescued by growth that will only arrive in the latter part of the year.”
EDC’s forecast calls for Canadian export sales to remain 11 per cent below the pre-recession peak, with emerging weakness crimping sales growth in the coming months and holding the increase in 2011 to single digits.
Weakness is expected to be widespread, affecting export sales in most industrial sectors. EDC believes that export growth will edge down from 11 per cent this year to just 6 per cent in 2011.
“Canada will not be able to dodge the world economy’s soft spot,” Hall said.
“The sharp global rebound was good to primary producers, shoring up demand and giving prices a boost in the oil and base metals categories. Slower growth is forecast to weigh on commodity prices and dampen growth in 2011.”
Source: EDC
According to Export Development Canada’s (EDC) Autumn 2010 Global Export Forecast, released today, EDC forecasts that after generating growth of 4.2 per cent this year, the world economy will expand by a slower 3.9 per cent in 2011.
“Slower growth has taken the world by surprise; the sharp, six-month rebound that began a year ago persuaded many that recovery was in full swing,” said EDC Chief Economist Peter Hall.
“The global economy got very quiet out there mid-way through this year, and it’s going to be weak for some time. Recovery is still at least a year away, and navigating though this period will be challenging – a moment of truth for the world economy.”
The weakness will be most obvious in developed economies, where EDC expects growth to reach 2.4 per cent growth in 2010 before sliding to 2.1 per cent in 2011. With few exceptions, EDC expects emerging markets to share in the current weakness, but with growth still ahead of average at 6.4 per cent this year and 5.9 per cent in 2011.
Mr. Hall cautioned that there are four key drivers to global demand that will challenge short-term growth strategies:
• big-market consumers, a huge source of global demand, are generally quite nervous. They are already busy paying down swollen debt loads, but could weaken demand further by being frightened into more excessive thrift.
• stimulus exhausted most of the available policy ammunition. There are key doubts about both the affordability and the actual impact of augmented stimulus.
• financial institutions remain reticent about lending, a key ingredient to economic growth.
• slower growth is weighing down key emerging markets that thus far have buoyed overall demand.
“At first blush, the global forecast numbers don’t look bad at all, but in actual fact they mask the weakening we are currently witnessing,” said Hall.
“Growth for 2010 is largely behind us. The impressive back-to-back increases in GDP that began in the fourth quarter of 2009 account for the bulk of the 2010 growth, while the 2011 forecast is rescued by growth that will only arrive in the latter part of the year.”
EDC’s forecast calls for Canadian export sales to remain 11 per cent below the pre-recession peak, with emerging weakness crimping sales growth in the coming months and holding the increase in 2011 to single digits.
Weakness is expected to be widespread, affecting export sales in most industrial sectors. EDC believes that export growth will edge down from 11 per cent this year to just 6 per cent in 2011.
“Canada will not be able to dodge the world economy’s soft spot,” Hall said.
“The sharp global rebound was good to primary producers, shoring up demand and giving prices a boost in the oil and base metals categories. Slower growth is forecast to weigh on commodity prices and dampen growth in 2011.”
Source: EDC
