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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Canada could lead G7 in growth this year, expert says

Monday, April 24, 2017 > 11:44:42
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Canada could lead G7 countries in economic growth this year, a veteran economist told a Kitchener audience Thursday. Surpasing the projections done by BMO (captured in the image above. Click on the image for link to BMOS's full report).

While many nations will struggle with constrained growth rates of 1.5 or two per cent, Canada is on track for 2.5 per cent growth this year, said Sal Guatieri, senior economist at BMO Capital Markets.

That's up significantly from last year's 1.4 per cent. And it's despite — and in some cases, because of — Donald Trump's election south of the border, Guatieri said.

In the United States, "investors generally believe that a president with a pro-business attitude … may not make America great again, but certainly stands a chance of making the economy better again," Guatieri told a Confederation Club luncheon.

Even though some of Trump's expected reforms and proposals — tax cuts, infrastructure spending, a lighter regulatory environment — likely won't be introduced until later this year or next, the markets are anticipating their arrival. Consumer confidence and investor enthusiasm is on the rise.

And Trump's more mainstream advisers seem to be steering the tone of the conversation away from some of the more protectionist rhetoric that would prove damaging to Canadian exports, Guatieri said.

"Americans buy three-quarters of everything we sell abroad," he said. "Tweaking" the North American Free Trade Agreement — as opposed to ripping it up — is far less ominous to Canadian exporters, Guatieri said.

That said, "(Trump's) commentary on NAFTA seems to switch about weekly, depending on what audience he's talking to," said Guatieri. And true to form, Trump took on Canadian energy, lumber and dairy trade practices in a White House tirade on Thursday.

A U.S. border adjustment, or import, tax could hike prices on Canadian imports by 20 per cent, but Guatieri said Trump isn't a big fan of the proposal and the economist doesn't think such a tax would be broadly applied.

The U.S. economy is expected to nip at Canada's heels this year, with 2.4 per cent growth compared with just 1.6 per cent last year. Canada is advancing on the strength of supportive financial conditions, an upswing in exports, and anticipated infrastructure spending, Guatieri said. But one of the biggest boosts is the fact that Canada's oil-producing regions are starting to grow again.

Guatieri did caution, though, that one of the longest periods of growth on record in the U.S. could end within a couple of years. "Expansions don't die of old age, but they certainly run out of gas."


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