Skip to main content

Bank of Nova Scotia CEO Rick WaughPAUL DARROW/Reuters

Canada needs to boost trade with emerging markets and shed its "complacent" reliance on the United States if it is to grow in the decades ahead, the chief of Canada's third-largest bank says.

In a speech to the Toronto Board of Trade Monday night, Bank of Nova Scotia chief executive officer Rick Waugh said the country has a unique window of opportunity with a strong dollar and a sound financial system, at a time when other nations are facing adversity. However, such windows of opportunity "have a habit of closing," Mr. Waugh warned .

In the text of his speech provided in advance of the event, Mr. Waugh argues that too many Canadian companies are "stuck in an old way of thinking," having grown accustomed over the past few decades to a low Canadian dollar, a resource-based economy, and a global marketplace dominated by several large developed countries, such as the United States.

That picture has now changed dramatically, Mr. Waugh said, and the focus must now be on emerging markets.

By the middle of this century, emerging markets will be responsible for 70 per cent of global trade, he said. However, just 8 per cent of Canada's exports now go to emerging markets, and only 4 per cent of the country's outward investment.

"Our historical near-total reliance on the U.S. may have been enough in the last century, but it hasn't prepared many of us for the next century," Mr. Waugh said. "It has made us complacent – too comfortable to sit back and be happy trading with ourselves or with the big market in our back yard, rather than sharpening our skills to take on the bigger world."

"Even today, nearly three-quarters of our exports go to the U.S. That's too concentrated, especially given its issues," he said.

Mr. Waugh's comments are largely a reflection of the strategy his bank has pursued over the past two decades. While some of his rivals, such as Toronto-Dominion Bank and Bank of Montreal, have expanded significantly in the United States, Scotiabank has executed more than $6-billion worth of acquisitions in emerging markets throughout Latin America and Asia over the past six years alone. With operations in more than 50 countries, Scotiabank is considered Canada's most international lender.

Scotiabank's $1-billion purchase of a 51 per cent stake in Colombia's Banco Colpatria last year supports this argument, Mr. Waugh said. Scotiabank chose Colombia for its largest international takeover because of where the country is headed, rather than where it's been.

"It's not a country that most people think of," for investment and growth, Mr. Waugh acknowledged. But an increasingly stable political environment, a growing middle class, and a number of trade agreements signed with Colombia in recent years make it ripe with opportunity for Canadian companies, he said.

Raising Canada's export clout on the world stage has become a key concern for the bank of Canada, which has grown concerned that the country is slipping in terms of trade. Canada's export performance is the second-worst in the G20 and is estimated to cost the economy more than $120-billion a year in lost GDP, unless the country can make up lost ground, Mr. Waugh said in the text of the speech.

"Taking our products and services to high-growth emerging markets can help us reach each of these goals," he said. "We need to understand that a global shift is well underway. Our traditional trading partners in the developed world are facing prolonged slow growth and serious structural issues that are likely to hinder them for many years."

Report an error

Editorial code of conduct