Skip to main content

Paul Darrow/paul darrow The Globe and Mail

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.

Story continues below advertisement



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.



Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter