The combination of a lower Canadian dollar and an improving world economy should strengthen the position of Canada’s food and beverage manufacturing sector.
On Wednesday the Bank of Canada released its . In its outlook for the global economy, the Bank predicted faster economic growth in 2014 for the United States, Euro Area (the 18 countries that use the Euro) and Japan. However, growth in China is predicted to continue to slow as it continues the transition to an economy based on consumption.
The transition towards a consumer-oriented economy in China is good for agricultural markets. Overall the improved economic outlook of our largest trading partners is supportive of agricultural exports. The Bank of Canada projects that net exports will make a positive contribution to the Canadian economy in 2014 unlike 2012 and 2013. Part of the increase in exports will be driven by the falling value of the loonie.
The U.S., Euro Area and Japan accounted for 77% of our manufactured food and beverage exports through the first 11 months of 2013. Strengthening housing prices in the U.S., softer austerity measures in the EU and wage increases in Japan should all help boost consumer confidence. In turn, this can expand the market for high value agri-food products from Canada. Canadian agriculture benefits from a strong supply chain, from top to bottom.
- James Bryan, Agricultural Economics Analyst