Go to the Globe and Mail homepage

Jump to main navigationJump to main content


Report on Business

Economy Lab

Delving into the forces that shape our living standards
for Globe Unlimited subscribers

Entry archive:

Economy Lab has moved

Only Globe Unlimited members will now have access to a wide range of insightful commentary
and analysis on the economy and markets previously offered on this page.

Globe Unlimited subscribers will be able to read these columns,
written by some of Canada’s most deeply respected economists,
such as Christopher Ragan, Sheryl King, Andrew Jackson, and Clement Gignac,
as part of our ECONOMIC INSIGHT section.

All of our readers will still be able to browse the Economy Lab archives and read our
broader coverage of economic data and news by accessing their 10 free articles a month.

Learn more about Globe Unlimited and how to subscribe.

(Paul Darrow/Paul Darrow for The Globe and Mail)
(Paul Darrow/Paul Darrow for The Globe and Mail)

Economy Lab

Exporters caught in global headwinds Add to ...

Batten the hatches. Canadian exports -- a key driver of the economy -- are in for a bumpy ride as global economic conditions deteriorate.

The country’s net exports are expected to remain a “major” source of weakness, the Bank of Canada said as it left interest rates unchanged Wednesday. In a notable shift from its last announcement, the central bank said the need for rate hikes has diminished.

The reason for that weakness -- tepid global demand and “ongoing” competitiveness challenges, particular the persistent strength of the Canadian dollar.

The decision comes a week after a report showed economic activity contracted in Canada in the second quarter -- largely because of a 2.1-per-cent slide in exports. Some of that was due to temporary factors -- wildfires in Alberta, supply disruptions stemming from Japan’s troubles -- but not all. Manufacturers continue to grapple with a triple whammy of lacklustre U.S. demand, a strong currency and rising global competition.

The bleaker outlook comes as the Canadian Federation of Independent Business’s monthly poll shows the weakest confidence reading in two years.

Several banks have downgraded their growth expectations. UBS, for example, slashed its growth rate for Canada to 2.2 per cent this year from its previous estimate of 2.9 per cent, and to 2 per cent next year from 2.3 per cent, partly because of weaker activity in the U.S.

To add salt to the wounds, a report today by the World Economic Forum showed Canada has tumbled out of the top ten in terms of global competitiveness. Canada slid two spots to 12th place overall.

“Canadian businesses do not appear to be adapting adequately to globalization or building effective global value chains as quickly as their international competitors,” it said.

In the know

Most popular videos »


More from The Globe and Mail

Most popular