World economic growth to 2025: A mixed bag
Global GDP will grow by 2025, but more slowly than in the previous decade. The report shows a divide in global growth among:
- advanced economies, which are expected to see some growth by 2025: U.S. GDP growth of 2.4% is projected higher than the OECD average (2.1%), Canada (2.1%) and the (1.7%).
- several major emerging economies (e.g. China, Brazil and Russia) projected to struggle to maintain their recent pace of growth, while India‘s growth is a ‘robust’ 7.6%.
- developing economies (e.g. Bangladesh and the Philippines) likely to continue growing, but more slowly.
The Canadian dollar also likely to rise
The loonie is expected to strengthen relative to the USD over the outlook period, as oil prices are projected to increase 8.3%/year through 2025. Likewise, the euro, yen, Chinese yuan and Russian ruble are all expected to strengthen relative to the USD (based on inflation). This will help preserve Canadian trade competitiveness.
What does it mean for Canadian agriculture?
1. Emerging/developing markets to drive food consumption growth through 2025
Emerging/developing market population growth, income growth and changing dietary preferences will drive food consumption growth. Their consumption of more varied proteins, processed foods, sugars, fats and oils is expected to grow as more people spend more of their income increases on food
Overall per capita food consumption is projected to grow in developing markets, although developed countries will likely account for the highest per capita consumption. Cereals will remain the world’s dominant food per capita, despite reduced consumption in developed countries. Meat intake will also grow, particularly in North America as the U.S. economy expands and prices fall.
2. Global production to grow more slowly
Overall ag output is expected to grow 1.6%/year until 2025, with crop output at 1.5%/year.
3. Ag trade will slow – and change
Trade in crops and meats will slow in the outlook period compared to the last decade, a trend likely to be accentuated by further concentration of exports from major exporters – including Canada. The OECD-FAO projects that for wheat, beef, grains, canola, pork and soybeans, the top five exporters will account for 70% of total exports by 2025; Canada is expected to export at least 40% of the world’s exports of oil seeds (other than soy).
4. China’s impact uncertain
China’s 2006-2015 GDP growth of 9.0% is expected to slow to an average of 6.2%/year by 2025, which will help to slow growth of global cereals imports. A major importer of many ag commodities, China’s economic slowdown is likely to impact trade and prices overall. A second impact may be felt as China releases its grain stocks, particularly corn and soy.
Check back here for more on the health of Canada’s agricultural trade and production.