Canada’s exports of goods and services are poised for a 5.3-per-cent gain in 2014, paced by a cheaper dollar and higher shipments of lumber, aircraft and machinery, according to a new Export Development Canada survey.
However, the federal export lender is downgrading its expectations for this year in a semi-annual export forecast being released Tuesday.
The EDC said exports would grow 4.4 per cent a year, down from the 8-per-cent gain it had forecast just six months ago.
Canadian exports stalled out in 2012 and have struggled to regain momentum ever since. Canada posted a 20th consecutive monthly trade deficit with the rest of the world in August.
But the EDC said the trend is poised to change in 2014.
“Conditions are already ripe for decent Canadian export growth,” EDC chief economist Peter Hall said. “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.”
Mr. Hall added that pent-up demand and higher confidence levels would also help drive exports, led by forestry products (expected to increase by 11 per cent), industrial machinery (up 9 per cent) and aircraft (up 9 per cent).
At the other end of the spectrum, the EDC said fertilizer exports would fall 5 per cent due to lower prices, and autos and advanced technology products would post minimal gains of 1 per cent.
The forecast assumes a Canadian dollar at 97 cents (U.S.) in 2014, compared with a 98-cent loonie this year.
Much of Mr. Hall’s optimism hinges on what happens in the United States, the destination of 74 per cent of Canadian exports in 2012. The United States is further down the “recovery road” than other major economies and the country’s private sector is regaining strength, he pointed out.
The EDC expects the U.S. economy to grow 3 per cent next year, compared with 2 per cent in Canada, 1.6 per cent in Japan and 1 per cent in Europe. Overall global growth is expected to reach 3.9 per cent, up from 3 per cent this year.
Canadian exports have lagged in the past couple of years because the U.S. has been slow to emerge from the recession.
The larger challenge for Canada, as Bank of Canada senior deputy Governor Tiff Macklem pointed out in a recent speech, is that Canada has been steadily losing share of both the U.S. and overall global markets in recent years.