Canadian non-resource exports should post healthy gains this year, the country's trade financing agency said on Monday, a development the central bank is counting on to help revive an economy hobbled by weak global energy prices.
Export Development Canada predicted
the consumer goods, automotive and aerospace sectors would post double-digit growth in 2016 on the back of a robust U.S. economy. Industrial machinery exports should advance by 7 percent, it said.
Overall exports are seen rising a modest 2 percent this year, held back by a 14-percent drop in the value of energy shipments. Canada is a major energy exporter and has been hit hard by slumping crude oil prices
Peter Hall, the EDC's chief economist, said while commodities are struggling, consumers' need for homes, furnishings and transportation are rising again.
"Non-resource exports are critical at the moment," Hall said.
The Bank of Canada is relying on non-energy exports to help make up for the damage done by low oil prices and rebalance the economy. The central bank said last week it could take more than three years for the country to recover.
EDC forecast aircraft and parts exports would increase by 13 percent, in part due to Bombardier Inc's new CSeries passenger jet entering into service, as well as increased demand for flight simulators and services from CAE Inc.
The agency says motor vehicles and parts exports should rise by 10 percent as U.S. shoppers replaced older models, while consumer goods should advance by 14 percent.
EDC said the weaker Canadian dollar helped firms selling goods to the United States, which takes around 75 percent of all Canadian exports. The currency hit a 12-year low in January, but recovered to touch a nine-month high last week.
On Monday, the loonie sat at C$1.27 to the U.S dollar, or 78.74 U.S. cents.
The Bank of Canada said
in an April 13 forecast that the economy faced downside risks, including a stronger currency that could drag on non-commodity exports.
"Most businesses I speak to are telling me they were planning for (dollar) parity, so we are still well below that," said Hall, adding that the threats to his forecast included turbulence in global stock markets and currencies.
EDC expects the energy industry to stage a partial recovery in 2017, when exports from the sector are forecast to increase by 18 percent. It sees overall exports up 6 percent in 2017.
(Reporting by David Ljunggren, editing by G Crosse)