Contact

A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

All Reports

 
Jan 19 2017

Exports Key to Canadian Economy in 2017

The Bank of Canada (BoC) hopes that exports, along with manufacturing, can drive growth in 2017, as the housing market shows signs of cooling after surging last year. However, there are concerns about export prospects, given that export growth was quite weak for much of 2016, despite a spike in November. Furthermore, with the U.S. being the top destination for Canadian exports, there are fears that the Trump presidency will increase U.S. protectionism.

While those concerns may have some merit, near-term export growth prospects are dependent upon cyclical factors, which will largely remain the case even if U.S. trade policy changes. Here, growth in ECRI’s Canadian Leading Exports Index (CALExI) clarifies the near-term outlook as it consistently anticipates cyclical turns in Canadian real export growth (chart).



Indeed, CALExI growth turned down in April 2014, anticipating the mid-2014 downswing in Canadian real export growth. While Canadian real export growth ticked up in Q3, and reentered positive territory, it remains extremely weak. In order to support Canadian economic growth this year, export growth will need to revive further. The latest update to our CALExI clarifies whether the Q3 uptick in export growth is likely the start of an upswing, or a head fake that will disappoint the BoC.

Related News & Events

Disentangling Cyclical from Structural

ECRI January 17, 2017

Hong Kong presentation slides and notes. More

 

2016 Shapes 2017 Cyclical Outlook

ECRI January 13, 2017

Cycle calls for inflation and growth extend into New Year. More

 

Interview on Cyclical Growth & Inflation Outlook

Bloomberg January 5, 2017

Lakshman Achuthan discusses cyclical prospects for the global economy. More