(Bloomberg) -- Canada’s export financing agency is giving a vote of confidence to the nation’s economy even in the face of growing trade tensions, raising its projections for sales abroad in its semi-annual forecast report.
Export Development Canada predicts the export of goods will grow 6 percent this year, up from a prediction of 4 percent growth six months ago, according to a report released in Ottawa on Thursday. That will keep the pace of growth close to the 2017 gain of 7 percent.
The forecasts imply the agency expects exports will make a strong comeback from a poor start to 2018, particularly among sectors that have been ensnared in U.S. trade disputes such as lumber, metals and aircraft. EDC Chief Economist Peter Hall attributed his optimism to the pull he expects from strong U.S. growth, fueled by “investor-friendly corporate tax changes” in the country.
“I would be much more worried about our forecasts if we did not have the backdrop of a very strong U.S. economy,” Hall said in a telephone interview. “Hot growing sectors are actually the ones in the cross-hairs of the U.S. administration now.”
For example, EDC predicts new aerospace orders are one reason Canada’s exports will rise this year after Bombardier Inc. won a reprieve in January from crushing U.S. tariffs. Shipments in the sector are forecast to surge 16 percent. The forestry industry meanwhile should benefit from growing U.S. home construction even after getting hit by new duties, with EDC projecting 16 percent growth for this sector as well.
Another boost from the U.S. will be for makers of machinery and equipment, with exports in that industry expected to rise 9 percent.
Canada’s exports are down in the first two months of 2018 compared to December, prompting some economists to reduce their forecasts for first quarter GDP.
Hall said there is even more room to grow the nation’s exports, particularly for companies that expand and diversify their markets.
“Strong global performance will lead to more investment as businesses work to meet increasing demand across a number of sectors, and that will lead to increased opportunity for Canadian exporters,” Hall wrote in the report.
On the weaker side of things, energy export growth will slow to 3 percent this year from 34 percent in 2017, EDC said.
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