No DID for validation!gcc2016

Canadian Interactive Trade Forecast—2016

Overview

The Interactive Trade Forecast tool allows users to visualize the five-year forecast for Canadian exports and imports for a selection of countries and products. It is available both in nominal and real (price-adjusted) terms, for which the base year is 2007. The complete data set presented in the interactive charts below can be accessed in the Trade Forecast database on our e-data portal. The forecast covers the following list of countries and products:

Assumptions and Key Takeaways

Key assumptions, based on the Canadian Outlook Economic Forecast—Summer 20161 :

  • Canadian real GDP is forecast to rise at an average annual compound rate of 1.9 per cent over 2016–20.
  • U.S. GDP will rise at an average annual compound rate of 2.3 per cent.
  • The Canadian dollar is forecast to appreciate gradually, from an average of US$0.76 in 2016 to US$0.83 in 2020.
  • Oil prices are forecast to rise slowly but steadily, from an average of US$45 per barrel in 2016 to US$68 in 2020.
  • Overnight interest rates will start to rise in the second half of 2017, going from an expected 0.6 per cent in 2016 to reach 3.1 per cent in 2020.

Highlights

  • Growth in Canadian exports has been modest so far this year, due in large part to the sluggishness in the U.S. economy.
  • In 2017, we expect the gradual rise in commodity prices, improving U.S. economic activity, and the still-low Canadian dollar to generate faster growth in Canadian exports to our southern neighbour.
  • While the U.S. is, by far, Canada’s largest trading partner, about a quarter of Canada’s merchandise exports and more than 40 per cent of its services exports go to non-U.S. markets. Canadian exports to some of these trading partners (such as the EU and China) should grow at a relatively fast pace in coming years, although risks to the global economy remain.
  • Weak demand within Canada and a Canadian dollar trading below 80 cents U.S. have weighed on import activity over the past two years. Higher commodity prices and a moderate increase in business investment in 2017 should lift demand for goods and services within Canada, leading to rising imports.

The briefing How Canada’s Trade Will Evolve Between Now and 2020 provides an overview of the main trends in Canadian exports to its main trading partners as well as the main trends in Canadian imports.

Methodology

The Canadian Interactive Trade Forecast expands upon our long-standing forecast by commodity found in the Canadian Outlook. First, we generate forecasts for total imports and total exports between Canada and each of the selected countries, using stochastic equations. Then, using an algorithm, we combine this forecast with that of our Canadian Outlook by commodity. (See “Model Design.”) This allows us to obtain a trade forecast by country and product that reflects the relative growth anticipated for each country and product at the higher level. This method has the benefit of taking into account both the relative size of trade and the relative growth.

 

 

 

1    The Canadian Outlook Economic Forecast is updated four times a year. Therefore, the assumptions used to compute the trade forecast may differ from the most up-to-date Canadian Outlook Economic Forecast. The trade forecast was finalized on September 12, 2016.

Interactive Charts


Photo of Julie Adès Julie Adès
Senior Economist
Global Commerce Centre