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TheStreet Open House

Canada And World Pulled Back Into Growth By Recovering U.S. Private Sector: EDC Forecast

OTTAWA, Oct. 30, 2012 /CNW/ - After considerable volatility in the last 4 years, EDC is predicting that Canadian exports of goods and services will rise 4.6 per cent in 2012 and an additional 6.3 per cent in 2013 in the wake of a structural, sustainable recovery in the U.S. private sector economy that will lead the world's next growth cycle.

"The bottom line is that while opposing economic forces are strong, the world economy's final growth push is on, led by the U.S. With Canada so close to the core of the action and well-positioned to participate, Canadian exporters should be readying themselves to run right now."

While many are focusing on the U.S. flirtation with the fiscal cliff, EDC is looking at the economic fundamentals of Canada's largest trading partner as a key factor in assessing Canada's trade performance through 2013. EDCs Fall 2012 Global Export Forecast sees the U.S. economy rising by 2.8 per cent in 2013, following 2.3 per cent growth this year.

"Consider the facts: Inflation-adjusted retail sales, a barometer for activity in 70 per cent of the U.S. economy, are now rising by 8 per cent. U.S. housing construction is currently up 35 per cent. For a leading indicator, that's doubly impressive," said Peter Hall, Chief Economist, EDC.

"U.S. corporations are sitting on $5.7 trillion of cash or near-cash that they are just about to start spending. Why now? Because as we speak, U.S. industrial capacity is within a hair of pre-recession limits. Parting with a mere fraction of this cash is sufficient to ignite an investment boom. Sum up the growth sources, and it looks like an economy on the move."

"Why is it not more obvious? Like any good rugby scrum, it's often hard to tell what's happening at ground level. Sighting the ball can be impossible, until one player grabs it and charges for the goal line. That player is the U.S. economy, and it's poised to make that dash at any moment."

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