Tuesday, August 10, 2010

Exporters Between a Rock and a Hard Place

(Troy Media – Todd Hirsch)

As a resource-producing region, Canada has become extraordinarily wealthy on the back of international trade.

Just prior to the Great Recession of 2008-09, Canada sold a record $483.6 billion worth of goods to international buyers. (In 2009, that number had tumbled to $360 billion). According to the Export Development Corporation, Canada’s exports are forecast to rise by 13% this year, and an additional seven per cent in 2011. But even with that growth, total forecasts will remain below the level reached prior to the 2008 downturn.

Why are exports stalling? And what, if anything, can Canadian companies do about it?

The main reason why exports will not be the roaring engine of growth going forward is that our main customer – the United States – is in no mood to shop. Despite having climbed out of recession last year, the recovery south of the boarder is looking very shaky. The housing market is still D.O.A., and the unemployment rate is still hovering around 10%. Adding to that is a huge swath of under-employed Americans – those who are technically working, but in jobs that are lower-paying than their skills would warrant, or working part-time. All together, about 1 in 6 American households are not in a position to be spending much on discretionary items. Read more