The lost decade of Canadian exports

We have a problem, and it dates back to well before the Great Recession

With the release of Statistics Canada’s annual review of merchandise trade last week and Bank of Canada chief Mark Carney’s remarks at the Kitchener Waterloo Chamber of Commerce days earlier, there’s been a lot of talk about Canadian exports recently–and a number of interesting charts to illustrate where the problem lies.

Carney, for example, turned up this graph to show how, unlike in most previous post-recessionary periods, exports haven’t played a major role in pulling us out of the doldrums this time:

According to the central bank governor, this lacklustre performance of Canada’s exports is mostly due to the fact that we’re still fixated on selling our stuff to the U.S. rather than faster-growing emerging economies:

Lakehead University economics professor Livio di Matteo, for his part, put the latest trade data from StatsCan’s report into a series of charts that shows how Canadian exports have indeed started to turn away from the U.S. and towards China (as well as, perplexingly enough, the U.K.). According to the latest statistics, the U.S. share of Canadian exports has dipped from 87 to 74 per cent between 2002 and 2011, whereas China’s has more than tripled. Check out di Matteo’s post and graphs here.

Somehow, though, the trade shift over the last ten years didn’t happen fast enough. We used World Bank data to compare annual percentage growth figures for Canada’s GDP (blue) and exports (red). The chart below illustrates what Carney was probably alluding to when he said: “Exports still have not regained their pre-crisis peak, and in fact remain below their level of a decade ago. Canada has steadily lost global market share throughout this period.” Clearly exports stopped being the economic propeller they used to be long before the Great Recession.




Browse

The lost decade of Canadian exports

  1. Absolutely we haven’t moved fast enough.  We still aren’t.

    And unfortunately we aren’t likely to.

  2. Is it worth noting that in Chart 1, the rate of recovery in exports (i.e., the slope of the curve) from its minimum value is comparable to the historic average (albeit slightly smaller)? One “reason” that exports have not bounced back as strongly as the historic average is the enormous drop in exports that occurred in the first 9 months of the downturn.  

    Your point that exports have not been the prime mover for the economy for some time is also apparent in Chart 1. Unlike the historic average, exports were flat or falling in the two years preceding the downturm. 

  3. Should this be surprising?
    1. Our dollar is substantially higher than it was ten years ago, making our exports more expensive.
    2. Our largest trading partner faces an ongoing slump.
    3. The stimulus tended to focus on boosting non-tradable sectors, particularly construction.

    In the long-run I see the more troubling trend as the changing composition of Canadian exports. Once upon a time we exported manufactured goods – particularly automobiles and regional jets, but also other goods. Over the past 10 years we have become increasingly reliant on commodity exports. That may make us vulnerable to fluctuations in commodity prices in the long run. I guess on the flipside, our terrible productivity growth is less of an issue in that kind of environment. At any rate, Canadians should read up on the “Dutch disease”.

  4. As someone who has worked in SE Asia and in the U.S. for over a decade and has since returned to Canada, I can speak from personal experience that Canada really has an astonishingly minimal presence overseas. Back in the 1990s, if you wanted to work for Canadian organization in Asia you had basically only two options: Embassy/consulate or Northern Telecom. NT is, of course, now as dead as a doornail.

    Also, it never ceased to amaze me how little Canada has going on product-wise / brand-wise outside of Canada. Tiny Denmark has Carlsberg seemingly *everywhere*–and they tailor the beer’s flavour for local markets. In Thailand, they even formulate the beer to have a formaldehyde taste similar to Thailand’s local Singha beer. 

    Nowadays, it seems the only real well-known brand internationally is the Blackberry. But with RIMM slowly imploding while Android, iOS and others eat its market share, it’s looking more and more like   Canada soon won’t have even that.

Sign in to comment.