Canada export agency cuts 2012-13 forecasts, sees U.S. rebound
By David Ljunggren
OTTAWA (Reuters) - Canada's export credit agency cut its 2012 forecast for growth in exports of goods and services on Tuesday in the wake of the European crisis, but it said exporters will see benefits next year from a recovery in the U.S. private sector.
Export Development Canada said 2012 exports would increase by 4.6 percent from 2011, down from the 7.1 percent it forecast in April. The agency also cut its 2013 export growth forecast to 6.3 percent from an earlier 7.3 percent.
Canada is heavily dependent on exports of goods and services, which accounted for just over 31 percent of gross domestic product in 2011. Around 75 percent of all exports go to the United States.
Canada, bolstered by the huge U.S. market, ran trade surpluses for more than three decades until the economic crisis of 2008. In December of that year it posted a deficit, the first since March 1976, and since then has put in a much more mixed performance as the economy of its largest trading partner has struggled.
Exporters are finding it hard to compete because of the strength of the Canadian dollar, increased competition, and weak markets. Canada recorded five straight trade deficits from April to August.
"We had a very soft underbelly in the economy in the summer," the agency's chief economist, Peter Hall, said in a phone interview, referring to investor concerns about U.S. debt and about the Greek election in June.
"There was a lot of worry ... but what we are seeing now is that that indeed was a temporary event."
Hall said Canada's close ties to the United States mean exporters will benefit as the recovery there takes hold. Continued...