FCC Senior Economist J.P. Gervais takes a look at current global economic trends and how they impact Canadian agriculture.
Key Points
Gross domestic product (GDP) measures the value of goods and services produced in the economy. A country’s increase in GDP generally implies an increase in income – one of the major drivers of food demand.
Inflation seems to be slowing due to the uncertainty in the economy. It’s likely that the Bank of Canada will wait until late 2012 before raising interest rates and the U.S. Federal Reserve may maintain record-low interest rates until mid-2013.
Long-term, we can expect a dollar slightly above parity if the growth in emerging markets driving demand for our commodities continues.
Uncertainty in the world economy and tight supply prospects for many agricultural commodities imply a volatile environment for businesses, but long-term prospects are still positive.
While U.S. recovery is slow, forecast for growth in emerging countries should translate into continued demand for Canadian agricultural products.
