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Outlook darkens for Canadian exports
Globe and Mail, July 24, 2008 by DAKSHANA BASCARAMURTY
A brief lift in Canadian exports that’s forecast for the rest of the year is just an energy price-fuelled mirage and will be followed by a decline in 2009, predicts Export Development Canada.
The strong energy sector is expected to boost export earnings by 4.2 per cent throughout the rest of the year, but this brief deviation will likely be followed by a 1 per cent slump next year.
“I’m not one who wants to paint a rosy picture at all,” said Peter Hall, vice-president and chief economist of EDC. “It’s still very dark times for Canadian exporters.”
The EDC predicts the consumer goods, automotive, forestry and advanced technology sectors will be hit particularly hard in the second half of 2008 by rising commodity prices, the spread of U.S. economic woes, and a strong Canadian dollar.
The EDC forecasts a dreary decline of 18 per cent for consumer goods throughout 2008 and a further slump of 4 per cent in 2009, based largely on the continued fallout from the U.S. subprime crisis.
“Clearly, there will be fewer homes to furnish in the U.S. for some time and demand for these products will be soft over the forecast,” the EDC report said.
Energy prices, boosted by exports of natural gas, are expected to skyrocket by almost 40 per cent before tumbling 7 per cent next year when price corrections are expected to set in, the EDC predicts.
“If there is a speculative premium, we expect it to melt away pretty quickly,” Mr. Hall said. He added he still expects prices to remain high enough to justify continuing oil sands and offshore oil projects.
In its bleak summer forecast, EDC sees a glimmer of hope in the agrifood sector.
Global demand for grain may have been met with panic by consumers, but was welcomed by exporters of food, which EDC expects will do well for the rest of the year.
Mr. Hall credited the rise of the middle class in emerging markets, especially China and India, for stimulating the health of this sector.
“As those consumers get richer, one of the first things they do is buy and consume food,” he said. “It’s the reason why food commodity prices are not in for the same correction [as other sectors].”
EDC forecasts that agrifood exporters will also cash in on the surge of biofuel development through oilseed sales, which it expects will rise 38 per cent in 2009.
Echoing its spring forecast, EDC predicts developing markets such as China, India, Brazil and Russia will provide Canadian exporters with healthier business than floundering developed markets such as the U.S., the European Union and Japan. But the EDC warns Canadian exporters to cash in on the robust developing markets while they can, as the economic turmoil developed markets have been wading through for months is expected to spread across the globe by 2009.
“If you see demand shrinking in 60 per cent of the world, you would expect to see a fairly rapid transporting of that into emerging markets that are feeding the machine,” said Mr. Hall, who forecasts China in particular may experience “Olympic hangover.”
The outlook for the Canadian dollar may spell a bit of relief for some Canadian exporters.
The EDC predicts the loonie will hover close to the U.S. dollar, but then drop to between 94 cents (U.S.) to 97 cents in the first half of 2009 with the expectation of energy price corrections. Mr. Hall said 86 per cent of surveyed exporters believe the value of the loonie will hold steady or decline through the end of 2008.
“The top strategy that we could identify in terms of them dealing with it was to hang in there and absorb the loss,” he said.
International Energy Outlook 2008 – Highlights
Source: Energy Information Administration
From press release:
World marketed energy consumption is projected to grow by 50 percent between 2005 and 2030, driven by robust economic growth and expanding populations in the world’s developing countries, according to the reference case projection from the International Energy Outlook 2008 ( IEO2008 ) released today by the Energy Information Administration (EIA).
Average world oil prices in every year since 2003 have been higher than the average for the previous year and prices in 2007 were nearly double the 2003 prices in real terms. The IEO2008 uses oil price cases originally developed in the summer of 2007 for use in the Annual Energy Outlook 2008, which focuses on the U.S. energy outlook. These prices do not reflect the substantial runup in prices that has occurred since that time. Nonetheless, although liquid fuels are expected to remain the largest single source of energy through 2030, the liquids share of marketed world energy consumption declines from 37 percent in 2005 to 33 percent in 2030 in the IEO2008 reference case.
In addition, the share of conventional oil in the overall liquids supply is declines with expanded use of unconventional oil, biofuels, and other unconventional liquids. High oil prices lead many consumers to switch to other fuels when feasible; fuel-switching and efficiency gains, for instance, slow the growth of oil use in the industrial sector. Those trends are even stronger in the IEO2008 high price case, which reflects oil prices that are closer to those being paid in mid-2008, as this report is being issued.
Innovation in emerging markets: 2008 annual study
Source: Deloitte Touche Tohmatsu
A spate of high-profile product recalls involving emerging market suppliers has made product safety and product quality top issues for manufacturing companies. Also, in response to a rising “green” consciousness among consumers, global manufacturers are paying more attention to the potential environmental impact of their production processes.
The “Innovation in emerging markets: 2008 annual study” by Deloitte’s Global Manufacturing Industry Group explores how manufacturers from developed and developing countries view product safety, product quality and environmental standards in emerging markets and how they are managing their exposure to risk stemming from sourcing from these markets.
Based on a global survey of more than 650 executives across various manufacturing sectors including: industrial equipment, process industries, automotive, consumer goods, medical equipment/pharmaceuticals, telecommunications, and aerospace and defense, the report provides perspectives on how companies are:
- Responding to risks in emerging market sourcing
- Taking steps to upgrading standards
- Selecting emerging market suppliers
- Monitoring emerging market suppliers
- Building a sustainable supply chain
+ Full Report (PDF; 531 KB)
Free registration required.
Capital Access Index 2007 – Best Markets for Business Access to Capital
From press release:
Access to capital is of increasing importance in today’s global credit squeeze, increasing the competition among both developed and emerging markets as they attempt to build and sustain a thriving business sector.
The region that may be best positioned to succeed in this difficult economic environment is Hong Kong, which placed first in the Milken Institute’s 2007 Capital Access Index, an annual ranking of entrepreneurial access to capital around the world.
In the newest Index, global and regional economic trends, including stock market activity, changes in tax policy, oil prices, volatile interest rates and currency values, played a significant role in some of the reshuffling of the top 10 countries in the index.
The leaders in the newly released Index, are Hong Kong, which held onto first place, followed by the United Kingdom (up from third place) and Canada (up from fourth). The United States, which dropped from fourth to fifth last year, slipped off the top 10 rankings (Finland and Norway tie at 9th) in the 2007 index, to 11th place, due to a weaker macroeconomic environment, including higher and more volatile interest rates and higher inflation, compared to the other top 10 countries.
+ Full Report (PDF; 1.4 MB)
Free registration required.
Via: Docuticker
From PriceWaterhouseCoopers :
Companies considering direct investment in emerging economies should look at a broad range of possible destinations and weigh up the balance of both risk and reward when making their final decision, according to a new report from the emerging markets group at PricewaterhouseCoopers LLP.
The best known emerging markets – in particular the BRIC (Brazil, Russia, India and China) countries – have definite attractions, but they may not always be the optimum choice for foreign direct investment in either the manufacturing or services sector, the report The PricewaterhouseCoopers EM20 Index – Balancing Risk & Reward points out.
The inaugural PricewaterhouseCoopers EM20 Index is an innovative ranking of 20 key emerging markets according to their relative attractiveness for overseas investment. Separate rankings have been generated for stylised manufacturing and services businesses, reflecting their differing investment criteria. For manufacturing companies seeking to invest in businesses overseas, low production costs are a key requirement; for services companies seeking to sell to domestic markets, emerging economies with relatively high per capita income are generally the most attractive.
Vietnam takes the top spot as the most profitable emerging market for manufacturing companies followed closely by China, Poland, Chile and Malaysia. On the services side, the United Arab Emirates leads, followed by Saudi Arabia, South Korea, the Czech Republic and Hungary.
The PricewaterhouseCoopers EM20 Index is based on a model, developed by PricewaterhouseCoopers economists, which closely mimics the methods used by companies in the real world when deciding where to invest. Unlike other indices, the PricewaterhouseCoopers EM20 incorporates both reward factors (economic fundamentals such as GDP per capita, projected economic growth rates, taxes, transport costs and tariffs) and risk aspects (country risk premia derived from bond market data, which act as a proxy for the market’s view of country risk).
Deloitte Insights is a weekly audio business news podcast that delves into the business strategies that address the issues affecting your industry. Topics such as accounting, audit, tax, finance, technology, risk management, governance and much more are discussed with some of the industries most experienced minds at the Deloitte Touche Tohmatsu member firms. Subscribe to the podcast series to receive the latest episodes automatically, or listen to them now on your personal computer.
Latest episodes include:
The Greening of IT: What Companies Can Do to Save Energy, Money and the Environment (39:58)
, Heeding the Red Flags: Due Diligence in the Global Marketplace (29:43) and
The Global Factory: Red Hot Trends in Manufacturing (36:30)
Worth checking out …
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OGD Markets/Trade Info …
Agriculture Canada
Scan through hundreds of market reports organized by product or country, or use our Enhanced Search Feature to customize a web page with all the available information from the ATS specific to your needs and interests.
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Canada United States Europe Asia Pacific Southeast Asia Latin America/Caribbean Middle East/North Africa Sub-Saharan Africa Market Pricing Dairy, horticulture, poultry, red meat, grains and oilseeds, special crops Enhanced Search FeaturePersonalize a homepage specific to your needs and interests. |
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This section provides in-depth, industry-specific analysis, statistics, contacts, news, events, financing and regulatory information for Canadian business.
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Searches for Canadian companies by category, keyword or NAICS code, as well as through specialized company directories.
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Helps companies identify, select and develop technology options to satisfy future service, product or operational needs.
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Minerals and Metals Sector
Contributing Knowledge and Expertise
The Minerals and Metals Sector (MMS) of Natural Resources Canada is the federal government’s primary source of scientific and technological knowledge and policy advice on Canada’s mineral and metal resources and on explosives regulation and technology.
Learn more about how we are working for you:
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The State of Canada’s Forests
Contents
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- Forest Workers: The New Generation
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EDC
Market and Sector Guides
An Exporter’s Guide to Canada’s Agri-Food Sector
Exporting to India: A Guide for Canadian Businesses
Exporting to the United States: A Guide for Canadian Businesses
Discover New Markets (Brazil, Russia, India, China, Mexico)
World Trade in Services (PDF Format)
Weekly Forestry Commentary
From the wonderful folks at ResourceShelf, this compilation of resources to help businesses identify emerging markets and opportunities is a year old but still relevant and useful …
Resources of the Week: Emerging Markets
September 14, 2006
Introduction
Here is something about emerging markets that I’ll bet you didn’t know: According to Investopedia, the term was coined by Antoine W. van Agtmael of the International Finance Corporation of the World Bank back in 1981. Investopedia’s definition is as good as any: “(A)n emerging, or developing, market economy (EME) is defined as an economy with low-to-middle per capita income. Such countries constitute approximately 80% of the global population, representing about 20% of the world’s economies.”
An authoritative list of emerging market countries can be difficult to come by; various sources include different nations in the mix. However, Morgan Stanley Capital International’s Emerging Market Index is a pretty good compilation: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. This week, we offer a round-up of resources that deal with emerging markets.
General Information
+ Emerging Market News and Investing in Emerging Markets (Forbes.com)
+ Emerging Markets Data (Harvard Business School, Project Finance Portal; some subscription resources available only to the Harvard community)
+ Emerging Markets Subject Guide (Yale University Library)
+ Global Emerging Market Database (International Business Center, Katz Graduate School of Business/University Center for International Studies University of Pittsburgh; site currently under construction)
Reports
(free registration sometimes required)
+ Emerging Markets — Publications (PriceWaterhouseCoopers)
+ Emerging Market Priorities for Global Retailers: The 2006 Global Retail Development Index (A.T. Kearney; PDF, 940 KB)
+ Global Financial Stability Report (International Monetary Fund)
+ Global Fraud Survey: Fraud Risk in Emerging Markets (Ernst & Young; full report in PDF, 782 KB)
+ Innovation in emerging markets: Strategies for achieving commercial success (Deloitte Touche Tohmatsu; PDF, 647 KB)
+ Laboratories of Innovation: Leveraging Emerging Markets for Commercial Success (Deloitte Touche Tohmatsu; full report in PDF; 3.85 MB)
+ The New Global Challengers: How 100 Top Companies from Rapidly Developing Economies Are Changing the World (Boston Consulting Group; PDF, 475 KB)
+ Risk intelligence in the age of global uncertainty (Deloitte Touche Tohmatsu; PDF, 647 KB)
+ Wharton Istanbul Forum: Perspectives on Investing in Emerging Markets (Wharton School, University of Pennsylvania)
Country Information
+ BBC News: Country Profiles
+ CIA World Factbook
+ Country Guides (Harvard Business School, Baker Library)
+ Department for International Development: Country Profiles (UK)
+ Doing Business Database (World Bank Group)
+ Economist.com: Country Briefings
+ Foreign & Commonwealth Office Country Profiles (UK)
+ Library of Congress: Country Studies
+ Trade Information Center: Country Information (U.S. Department of Commerce)
+ U.S. Commercial Service Market Research Library (U.S. Department of Commerce; free registration required)
+ World Development Reports (World Bank Group)
Emerging market economies pose both opportunities and challenges for advanced economies. PricewaterhouseCoopers (PWC) released a new report “The World In 2050: How big will the major emerging market economies get and how can the OECD compete?” discussing their methodology for projecting the relative size of the17 largest economies in the world, in the period to 2050, and the effects of these growing emerging economies.
The 17 largest economies include the current G7 (US, Japan, Germany, UK, France, Italy and Canada), plus Spain, Australia and South Korea, and the seven largest emerging market economies, which PWC refers to collectively as the ‘E7’ (China, India, Brazil, Russia, Indonesia, Mexico and Turkey).
PWC concludes that there is no one right way to measure the relative size of emerging economies compared to OECD economies. Depending on the purpose of the exercise, GDP at either market exchange rates (MER) or purchasing power parities (PPP) may be the most appropriate measure.
“E7 economies will by 2050 be around 25% larger than the current G7 when measured in dollar terms at MER, or around 75% larger in PPP terms.”
PWC discusses divergent demographic trends among the emerging economies and suggests that India has the potential to be the fastest growing large economy in world over the period to 2050.
The rise of the E7 economies should boost average OECD income levels through creating major new market opportunities. This larger global market should allow OECD companies to specialize more closely in their areas of comparative advantage, while OECD consumers continue to benefit from low cost imports from the E7 and other emerging economies.
However, PWC finds that mass market manufacturers will tend to suffer, both in low tech and increasingly in hi-tech sectors. There may also be a tendency for income inequalities to increase within the OECD economies, with low and medium-skilled workers facing an increasing squeeze from lower cost workers in the emerging economies.
Finally, PWC explores the important public policy challenges posed by these developments. They advise avoiding a relapse of protectionism or subsidies for declining sectors. Instead the focus should be on boosting general education levels, facilitating retraining and business start-ups in areas adversely affected by global competition, and developing active labor market programs based on conditional benefit regimes, childcare support and in-work tax credits.
The complete report is available on PricewaterhouseCoopers website.
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