Global trade fell off a cliff in the recession. And while much of those flows have healed through the rocky recovery, little analysis has been done on how Canadian exporters are faring.
Until now. A new paper by Philip Cross, Statistics Canada's chief economic analyst, has found that while trade flows have bounced back in other countries, Canada is an exception.
Canadian exports tumbled 37 per cent from their peak as of May, 2009, in a dive that was similar around the world. But though exports have recovered in the U.S., Asia and the EU this year, Canada recouped only half -- or 53.5 per cent -- of its losses as of the second quarter.
The agency's study explores why Canada has lagged, and where. The sectors that were hardest hit by the recession have led the recovery. But it finds four sectors have continued to shrink in the rebound -- falling another 2.4 per cent in the recovery on top of a 12.4-per-cent decline in the recession.
Here are some details on the four:
Machinery and equipment
Sales abroad are still below pre-recession and recessionary levels. Some of that might be due to lower prices, but volumes have shown no change in the past seven quarters. Telecom equipment has fallen more in the recovery than during the recession, while industrial and agricultural machinery are well below 2009 levels.
Some weakness reflects the slow recovery in business investment in the U.S., the paper said. Still, lags are common and the recent influx of new orders for aircraft augurs a rebound for aerospace exports.
Agricultural products and consumer goods
Together they posted further declines in the recovery. The drop in the ag sector may stem from a poor wheat harvest. In consumer goods, demand for pharmaceutical products (which comprise nearly half this sector) has returned to more normal levels after it spiked in 2009 amid the H1N1 infuenza.
Still below pre-recession levels and barely half of their record highs of 2005. Lumber exports are still offs their peaks reached in the U.S. house-building boom while newsprint exports have declined by a third during the recession and into the recovery.
On the bright side -- energy sales are climbing again, with crude oil exports hitting a record in the first quarter, reflecting higher prices and more pipeline capacity to the U.S.
Auto exports have recouped 92 per cent of their losses in the recession (though they are still 30 per cent below the last peak in 2007). Truck exports have shrunk, while passenger car exports are near their all-time high.
Exports of industrial goods are back near a record -- led by a rebound in precious metals thanks to skyrocketing gold prices. Nickel and iron ore have also nearly recouped all their recession losses.
The conclusion? The rebound in Canadian exports has lagged other countries in the past two years because of the sluggish U.S. economy -- particularly in markets like lumber and natural gas.
Take the U.S. out of the equation, and exports to the rest of the world regained most of their recession losses by the end of last year.
The snag is that the U.S. is still home to nearly three quarters of the country's export market.
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