Canadian Exports to Slow as China’s Explosive Growth Curtailed

(The Canadian Press – Ross Marowits)

Canadian exporters will increasingly feel the heat as China’s economy further slows under the weight of a global economic decline and tightening internal credit, industry experts said Thursday.

After enjoying years of stratospheric growth, China’s economic expansion is expected to slow to 8.4% in 2009. And while it’s a figure that most countries would die to have, for the world’s most populated country it would represent a drop from 11.8% growth 2007 when it accounted for a third of global economic growth.

Its economy is expected to increase by about 9.9% this year, while Canada’s GDP is estimated to grow by 0.9% this year, followed by 1.9% in 2009.

Stuart Bergman, director of economics for Export Development Canada, said a slowing global economy will weaken demand for Chinese goods and weigh on key Canadian exports such as pulp and paper, chemicals, fertilizer, machinery, telecom and metals. “It’s not like there’s any sector that will be hit real hard, it’s just that what we’re likely to see is maybe a slowdown in the growth rate,” Bergman said in an interview.

China has become Canada’s third-largest export market, replacing Japan, Statistics Canada reported in April. Exports to China accounted to nearly 20% of the total growth of Canada’s exports in 2007.

But much of that growth was the result of stronger prices in 2008, not increasing volume, Bergman said. Reduced Chinese demand will likely further depress commodity prices, especially in 2009. Read more here.