CANADA ECONOMICS
StatCan. 2017-05-02. Trade by exporter characteristics: Goods, 2016
There were 43,255 exporting enterprises of goods in Canada in 2016, with export sales totalling $442.2 billion. The number of exporting enterprises was down for the first time since 2013, while lower energy prices drove down export sales for the second straight year.
The number of exporting enterprises was down by 1.5% in 2016, with small and medium enterprises (SMEs) accounting for the bulk of the decline. There were 616 fewer exporting SMEs in 2016 than 2015, with most of the enterprises trading goods solely with the United States. Nonetheless, SMEs accounted for 97.4% of all exporting enterprises in 2016, a share that has remained stable since 2010.
Chart 1 Chart 1: Annual change in the number of exporting enterprises and export sales
Annual change in the number of exporting enterprises and export sales
Most exporting enterprises export less than $1 million of goods annually
Export sales declined by $14.7 billion or 3.2% in 2016. The decrease was mainly attributable to large enterprises. Although large enterprises represented less than 3% of all exporters in Canada in 2016, they were responsible for almost 60% of all export sales.
Exports remained highly concentrated in 2016. The top 20 exporters accounted for nearly one-third of all sales. The largest 500 exporters in Canada, representing about 1% of all exporters, were responsible for over three-quarters of total export sales.
Consequently, the vast majority of exporters tended to have relatively low export sales. Enterprises exporting goods for less than $1 million in total during 2016 accounted for over three-quarters (32,919) of all exporting enterprises in the country. Since 2010, over three-quarters of all SMEs and almost half of all large enterprises have consistently exported less than $1 million worth of goods annually.
Chart 2 Chart 2: Share of the number of exporting enterprises, by export size, 2016
Share of the number of exporting enterprises, by export size, 2016
Export activity continues to expand with China
While the US dominates, China remained Canada's second most important exporting partner in 2016, both in terms of number of exporting enterprises and export sales. In 2016, 35,203 enterprises exported $341.3 billion worth of goods to the United States. At the same time, 4,052 firms exported goods to China in 2016, totalling $19.4 billion. The number of exporting enterprises and export sales to the United States both fell in 2016 compared with 2015, while both were up for China.
From 2010 to 2016, the number of exporting enterprises in Canada increased by 2,644, largely due to more enterprises exporting to the United States. In all, there were 2,230 more enterprises exporting to the United States in 2016 than in 2010. Other notable increases during this period were in the number of enterprises exporting to China (+651), United Arab Emirates (+293) and Vietnam (+246).
Chart 3 Chart 3: Non-US export destinations with largest increases in the number of exporting enterprises (2010 and 2016)
Non-US export destinations with largest increases in the number of exporting enterprises (2010 and 2016)
Lower exporting activity in most provinces
Exporter characteristics can also be analyzed based on establishments in addition to enterprises. The establishment, the smallest statistical unit within an enterprise structure, better reflects the primary industrial activity and the province of the exporter. One enterprise can have multiple establishments operating in different provinces and industries.
On this basis, there were 48,343 exporting establishments in Canada in 2016, down 1.5% from 2015. There were fewer exporters in every province except Quebec, Prince Edward Island and Nova Scotia. The largest declines were in Alberta (-289), followed by Ontario (-276) and Manitoba (-234).
Export sales were also down in most provinces, notably in Alberta where they fell 17.1%. British Columbia was one of the few provinces to show an increase. Export sales generated by establishments in British Columbia grew by 14.5% in 2016, on the strength of the manufacturing and wholesale trade sectors.
The share of the manufacturing sector in Canada's export sales increases
On an industry basis, establishments in the manufacturing sector accounted for more than one-third of all exporting establishments in Canada while generating two-thirds of all export sales in 2016. This was the highest share of export sales since data became available.
On the other hand, the mining, quarrying and oil and gas extraction industry was responsible for just over 1% of all exporting establishments, but more than 10.6% ($46.8 billion) of all export sales in 2016. This proportion has been declining in recent years, from a high of 18.2% ($72.8 billion) of total export sales in 2011. From 2011 to 2016, export energy prices decreased by 35.6%.
Export sales in the mining, quarrying and oil and gas extraction industry in Canada were down by 23.0% in 2016, following an 11.8% decrease in 2015. At the same time, the number of exporting establishments in this industry was down by 10.1% in 2016. Alberta contributed the most to the slowdown in exporting activity in this industry.
FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/170502/dq170502b-eng.pdf
SCOTIABANK. ECONOMICS. May 1, 2017. Chile
FULL DOCUMENT: http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/chile-execbriefing.pdf
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WESTJET. May 2, 2017. WestJet to purchase Boeing 787-9 Dreamliners
CALGARY, CNW - WestJet announced today a definitive purchase agreement with The Boeing Company for up to 20 Boeing 787-9 Dreamliner aircraft. This agreement includes commitments for 10 Boeing 787-9 aircraft to be delivered between the first quarter of 2019 and December 2021, with options for an additional 10 aircraft to be delivered between 2020 and 2024. The airline also announced it has selected General Electric's GEnx-1B engine for the 787.
"This order represents an exciting new chapter in WestJet's history," said Gregg Saretsky, WestJet President and CEO. "We have carefully executed on our strategic plan, first launching WestJet Encore to connect smaller communities across Canada to our growing network followed by our successful venture into wide-body flying to Hawaii and London Gatwick. Now, with the most sophisticated commercial airliner available, we turn our attention to further growing our international presence and introducing even more travellers to our award-winning guest experience."
The Boeing 787-9 Dreamliner is a state-of-the-art aircraft that is 20 per cent more fuel efficient than the Boeing 767 aircraft. With a range of more than 14,000 kilometres, the Dreamliner will give WestJet the ability to serve new destinations in Asia and South America, and to expand its service offerings into the European market.
"We welcome WestJet to the Dreamliner family and look forward to the new destinations they will serve," said Ray Conner, Vice Chairman of The Boeing Company. "WestJet, for its entire 21-year history, has been a loyal all-Boeing jet customer and we're excited to see them expand their fleet with the 787."
"Our ability to compete globally and deliver our plan comes from the hard work and dedication of our more than 12,000 WestJetters and I am excited for what this news represents for them," continued Gregg Saretsky. "They are truly representative of our Canadian values of warm hospitality and openness and on behalf of them, we now turn our attention to welcoming the Dreamliner to the WestJet family."
As part of this purchase agreement, WestJet is converting 15 firm orders for the Boeing 737 MAX that were to be delivered between 2019 and 2021 to options available between 2022 and 2024.
Caution regarding forward-looking information
Certain information set forth in this news release is "forward-looking information" within the meaning of applicable securities laws. Such forward-looking information includes, but is not limited to, information respecting: the anticipated timing of the proposed 787 deliveries to WestJet's fleet; the potential exercise of the option to acquire additional 787 aircraft; the expected benefits of the 787 aircraft and the GEnx-1B engine to WestJet; WestJet's intentions to grow its international presence; and the availability and anticipated timing of the additional 737 MAX option aircraft.
The forward-looking information contained in this news release is based on certain material factors and assumptions, including, without limitation: that WestJet will continue to follow its current business strategy during the time period discussed; that the specifications and performance of the 787 aircraft and the GEnx-1B engine will meet WestJet's expectations.
By its nature, forward-looking information is subject to numerous risks and uncertainties, many of which are beyond WestJet's control. The risks and uncertainties that may impact WestJet include, but are not limited to: potential delays in the delivery of new 787 or 737 MAX aircraft; changes in guest demand; changes in fuel prices; changes in aircraft specifications or performance; changes in general economic and industry conditions; changes in the competitive environment; challenges to WestJet's ability to effectively implement and maintain critical systems; and other factors and risks described in WestJet's public reports and filings. Readers are urged to consult the risks set forth in WestJet's annual information form and management's discussion and analysis for the year ended December 31, 2016, which are each available under WestJet's profile at sedar.com, for important additional information.
Readers are cautioned that undue reliance should not be placed on forward-looking information as actual results may vary materially from the forward-looking information provided. WestJet does not undertake to update, correct or revise any forward-looking information as a result of any new information, future events or otherwise, except as may be required by applicable law.
The Globe and Mail. May 02, 2017. WestJet boosts global profile, competitive position with Boeing order
GREG KEENAN - AIRLINE INDUSTRY REPORTER
WestJet Airlines Ltd. will boost its international presence later this decade and ratchet up its competition against Air Canada with the purchase of 10 Boeing 787 airplanes.
The planes are scheduled to be delivered between the first quarter of 2019 and December, 2021, giving WestJet the ability to expand its European offerings as well as fly to South America and Asia.
“We turn our attention to further growing out international presence,” WestJet chief executive officer Gregg Saretsky said in a statement Tuesday.
The order for the Boeing planes includes an option for WestJet to buy another 10 aircraft beginning in 2020.
The 787 has a range of 14,000 kilometres and is 20-per-cent more fuel efficient than the Boeing 767 that WestJet now uses on its existing international routes between several Canadian cities and London.
The 787 is a key part of Air Canada’s international growth. Air Canada will take delivery of nine 787s this year, bringing its operating fleet to 30 aircraft, part of a 37-plane order that will be complete by 2019.
At the current list price of $270-million (U.S.) apiece, WestJet’s firm order is worth $2.-7-billion or a total of $5.4-billion if all 10 options are exercised. Airlines typically receive discounts of as much as 40 per cent from the list price.
One industry source estimated that WestJet received a discount of as much as 60 per cent off the list price, given that it’s an existing Boeing customer, orders for the 787 are slowing and Airbus is pushing hard to sell its A-330, which competes with the 787.
As part of this deal, WestJet has converted 15 firm orders for the smaller 737 Max plane that were scheduled to be delivered between 2019 and 2021 to options that can be exercised between 2022 and 2024.
REUTERS. May 2, 2017. Canada's WestJet beats profit estimates, to buy up to 20 aircraft
(Reuters) - Canada's WestJet Airlines Ltd (WJA.TO: Quote) reported a better-than-expected quarterly profit on Tuesday, and said it agreed to buy up to 20 Dreamliner planes from Boeing Co (BA.N: Quote) as it seeks to add fuel-efficient aircraft to its fleet.
WestJet said it flew 5.7 million passengers in the first quarter ended March 31, up nearly 7 percent from a year earlier.
"We are seeing good results from Plus, our premium economy product, growth in our WestJet Rewards program and penetration into the business traveler segment," WestJet Chief Executive Gregg Saretsky said in a statement.
The company said revenue per available seat mile (RASM) rose 2.3 percent to 14.47 Canadian cents in the first quarter, marking the first increase in two years.
RASM is a measure of airlines' efficiency. The higher the RASM, the more profitable the airline.
WestJet also said it expects RASM to continue to improve for the rest of the year.
However, aircraft fuel costs jumped 41.5 percent to C$235.5 million ($172.3 million), hurt by higher oil prices.
Oil prices have nearly doubled from multi-year lows a year ago, and have weighed on profit margins at several airlines.
WestJet, Canada's second largest carrier, said the deal with Boeing includes commitments for 10 787-9 Dreamliner aircraft to be delivered between the first quarter of 2019 and December 2021.
The airline has options to buy 10 more planes, to be delivered between 2020 and 2024.
WestJet said the 787-9 was 20 percent more fuel-efficient than the 767s it owns.
The Dreamliners will also allow WestJet to offer new routes in Asia, South America and Europe, amid stiff competition from larger rival Air Canada (AC.TO: Quote).
WestJet's net earnings fell to C$48.3 million, or 41 Canadian cents per share in the first quarter ended March 31, from C$87.6 million, or 71 Canadian cents per share, a year earlier.
Excluding items, WestJet earned 56 Canadian cents per share, according to Thomson Reuters I/B/E/S, beating analysts' average estimate of 50 Canadian cents.
WestJet's revenue rose 8 percent to C$1.11 billion.
(Reporting by Muvija M and John Benny in Bengaluru; Editing by Sai Sachin Ravikumar)
BLOOMBERG. 2017 M05 2. WestJet to Buy Up to 20 Boeing 787 Jets for Long-Haul Routes
by Frederic Tomesco and Benjamin D Katz
- Canadian airline to spend up to $5.4 billion in expansion
- Carrier to convert order for single-aisle planes to options
WestJet Airlines Ltd. plans to order as many as 20 Boeing Co. 787-9 Dreamliners valued at $5.4 billion, adding the wide-body to its fleet as Canada’s second-biggest carrier expands long-distance service.
The move takes a page from Air Canada, which has relied on the Dreamliner’s fuel efficiency to lower operating costs. The order also helps clarify WestJet’s strategy for competing with the country’s largest carrier by entering new markets in Asia and the Western Hemisphere.
“This answers one of the primary questions about WestJet’s future but is a significant increase in overseas capacity,” Doug Taylor, a Canaccord Genuity analyst, said in a note to clients. “The market will want more detail on this expansion.”
The order marks a victory for Chicago-based Boeing over Airbus SE amid depressed sales for twin-aisle jets. WestJet Chief Executive Officer Gregg Saretsky said last year that the carrier would evaluate competing aircraft models from Boeing and the European planemaker if it decided to expand the wide-body fleet. WestJet’s order means Canada’s two biggest airlines will fly the 787, with Air Canada operating 24 Dreamliners at the end of last year.
With a range of more than 14,000 kilometers (8,700 miles), the Dreamliner “will give WestJet the ability to serve new destinations in Asia and South America, and to expand its service offerings into the European market,” the Calgary-based company said in a statement Tuesday. The carrier now operates some leased Boeing 767 aircraft that are more than 20 years old on European routes.
Adding Frills
Founded in 1996 to cater to leisure travelers, WestJet has been moving away from its original no-frills model -- patterned after U.S.-based Southwest Airlines Co. -- by adding premium economy seats, rolling out a short-distance unit and starting overseas flights to European destinations such as London. It unveiled plans last week to start an ultra-low-cost carrier to fend off Canadian upstarts.
WestJet plans to buy 10 of the 787-9 for delivery between early 2019 and the end of 2021, with options for 10 more of the planes to be handed over through 2024. The purchase would be valued at as much as $5.4 billion, based on list prices. Discounts are typical in the industry. WestJet also will convert orders for 15 single-aisle 737 Max jets, listing for a combined $1.7 billion, to options.
The Dreamliner order likely will elevate capital spending over the next several years, Cowen & Co. analyst Helane Becker said in a note to clients. She said she expected that management would address its plans for the ultra-low-cost carrier in a conference call Tuesday.
“Clearly a lot happening in Calgary, which may cause growing pains along the way,” she wrote.
Earnings Miss
WestJet announced the order as it reported first-quarter profit of 41 cents a share, trailing the 51-cent average estimate of analysts surveyed by Bloomberg. Revenue was C$1.11 billion ($810 million), while analysts predicted C$1.12 billion.
WestJet fell 3.7 percent to C$21.99 at 9:44 a.m. in Toronto, after dropping as much as 5.7 percent for the biggest intraday decline in six months. Boeing rose less than 1 percent to $183.08.
The carrier won an agreement from pilots in December for expanding long-distance routes overseas after starting services from Canadian cities to London. At the time, it was considering adding to its fleet of Boeing 767 planes.
BLOOMBERG. 2017 M01 5. Boeing, Airbus Brace for Slowdown as Jet-Buying Binge Nears End
by Julie Johnsson
- Lower fuel costs leave little need to replace old aircraft
- Planemakers probably will show orders fell short of deliveries
The unprecedented jetliner shopping spree that’s spanned more than a decade is drawing to a close.
That’s bad news for Boeing Co. and Airbus Group SE, which face slowing jet sales and the highest level of airplane-delivery deferrals in at least 15 years. Final 2016 tallies to be unveiled over the next few days will probably show aircraft orders trailing shipments, a sign of a weakening market. Airline profits are poised to fall from last year’s peak, with even Persian Gulf juggernauts Emirates and Etihad Airways PJSC tempering growth.
Unlike past retrenchments triggered by terrorism or recession, demand has also been hurt by the relatively low cost of fuel. While oil has risen in the past year, prices are hovering at about $50 a barrel, half of what they were in mid-2014. That gives airlines less incentive to retire older jetliners or order newer, more efficient models.
The glut of jets is sapping interest in wide-body planes and threatening production increases that Boeing and Airbus have plotted over the next two years for the lucrative 737 and A320 families of single-aisle aircraft. With last week’s revelation that Emirates is postponing a dozen Airbus A380 superjumbos, the total number of delivery delays for the year reached 251, the most since at least 2001, according to Flight Fleets Analyzer data compiled by Bloomberg Intelligence.
“It’s not that the sky is falling, but we are definitely late in the cycle,” said Ron Epstein, an analyst at Bank of America Corp.
Brakes On
So far, planemakers have been able to find other takers for production slots that have been vacated as carriers such as United Continental Holdings Inc. and Southwest Airlines Co. postpone deliveries and scan the secondary market for bargains.
“The real question becomes how long are they able to do that for,” Epstein said during a presentation last month.
Nobody knows how steep the downturn will be or how long it will last, and the trade war with China threatened by President-elect Donald Trump only adds to the uncertainty. In contrast to previous slowdowns, global air travel is still growing and airlines are mostly making money, providing assurance they’ll follow through on the bulk of their orders.
Airbus and Boeing are sitting on a near-record $1.2 trillion order backlog, and to some extent are victims of their own success. Airlines aren’t racing to close deals for jetliner models that are sold out for the rest of the decade, such as Airbus’s A350 and Boeing’s 787 Dreamliner. As the second-largest U.S. defense contractor, Chicago-based Boeing has an added cushion: Weapons sales seem likely to increase because Trump has vowed to boost military budgets, even as he’s railed against costs.
There are signs, however, that the aerospace cycle has peaked. Global airline profit this year is forecast to fall 16 percent to $29.8 billion from 2016’s apex, according to the International Air Transport Association, an industry trade group. Another indicator of the aircraft manufacturing’s health, a measure of sales to shipments known as the book-to-bill ratio, is expected fall to the weakest level since the 2009 recession, according to Bloomberg Intelligence.
Boeing had netted 470 orders through Dec. 20, well short of its targeted deliveries of 740 to 745 planes for the year. Airbus reported 410 net orders through November. The European planemaker had been aiming to deliver 670 jetliners in 2016, 20 more than it forecast at the start of the year. The annual totals don’t include sales to Iran or deals closed late in December, including an order for 75 Boeing 737 Max placed by General Electric Co.’s aircraft leasing division.
Spokesmen for Boeing and Airbus declined to comment.
Airbus shares gained only 1.4 percent last year after surging 50 percent in 2015. Boeing climbed 7.7 percent, trailing the S&P 500 Index. The outlook for Boeing investors this year is worse, with a potential return of 0.4 percent based on the average 12-month target price of 26 analyst estimates compiled by Bloomberg. By the same yardstick, Airbus is poised for a 3.6 percent increase.
Twin-Aisle Glut
The market is also absorbing a glut of twin-aisle jets after output increased at a 16 percent annual pace from 2011 through 2015, said Richard Aboulafia, an aerospace analyst at Teal Group. Last month, Boeing announced a second cut in the production rate of its 777 jetliner amid a sales drought, while Airbus’s A330neo orders have stalled, he said.
About 18,070 passenger planes were in service as of November, a 41 percent jump from 2007, according to a Dec. 19 report by Deutsche Bank AG. Only 6.6 percent of the global fleet was stored, down from 8.3 percent in November 2007.
“It’s different manifestations of the same problem,” Aboulafia said. “With twin-aisles, it’s demand. With single-aisles, it’s fuel.”
There are other indications that the market is saturated: Lease rates peaked in 2015, while aircraft values have retreated since January 2016, said George Dimitroff, head of valuations for Flight Ascend Consultancy. Even prices for in-demand narrow-bodies like Boeing’s 737 and Airbus’s A320 could be at risk over the next three years if the planemakers follow through on plans to increase output 36 percent.
“Our analysis shows capacity growth will be too high with production rates increasing and retirements remaining low, so something has to give,” Dimitroff said. “Unless we see global air-travel growth above 7 percent over the next few years, it’s difficult to see how all that additional capacity on the market will be filled.”
Rising interest rates and the strong U.S. dollar -- the currency used for aircraft deals -- also threaten aircraft orders, Ken Herbert, an aerospace analyst with Canaccord Genuity, said in a report Thursday.
The “backlog today is more concentrated in emerging markets, notably Asia, than at any prior time or cycle,” Herbert said. “The increased exposure to Asia and the capacity growth assumptions upon which fleet plans are currently based do represent a significant risk we are watching heading into 2017.”
The Globe and Mail. May 01, 2017. EU joins U.S. in targeting Canadian milk-pricing practices
BARRIE MCKENNA
OTTAWA — The European Union has joined the Trump administration in complaining about a controversial new Canadian milk ingredient pricing scheme.
A top EU official expressed concern on Monday that its farmers may not reap the spoils of the elimination of steep Canadian tariffs on milk-protein ingredients when the Canada-EU free-trade agreement takes effect in July.
“We don’t want to find ourselves in a position where what we negotiated in good faith is not actually being honoured,” Phil Hogan, the EU commissioner for agriculture and rural development, said in an interview.
Europe is poised to gain duty-free access to a lucrative and growing market for concentrated milk protein, which is sometimes used to make cheese, yogurt and other dairy products. Canada currently imposes a prohibitive 250-per-cent tariff on European imports of the product, but it will drop to zero when the Comprehensive Economic and Trade Agreement (CETA) comes into force.
The United States already enjoys duty-free access in Canada for milk-protein ingredients, including so-called ultrafiltered milk. But U.S. officials have complained that the creation of a new lower-priced class of industrial milk – an incentive to get dairies to produce protein substances in Canada, using Canadian milk – is pushing U.S. imports out of the market. Milk-protein imports from the United States, worth $133-million last year, have fallen sharply in recent months, after the new price was rolled out in Ontario last year and more recently in the rest of the country.
Mr. Trump has accused Canada of mistreating U.S. dairy farmers, tweeting last week: “We will not stand for this. Watch!”
Mr. Hogan characterized Canada’s new ingredient-pricing scheme as a “potential worry” for the EU. He declined to detail specific objections, but said he raised the issue in meetings on Monday in Ottawa with Canadian International Trade Minister François-Philippe Champagne and Agriculture Minister Lawrence MacAulay.
“We are not demanding anything,” he added. “We are just demanding the full implementation of the [CETA] agreement.”
In an e-mailed statement, Mr. MacAulay insisted that the milk-ingredients price is an “industry-led initiative” and that Canada upholds its international trade obligations. “Canada strongly believes in a rules-based system of trade, and therefore always abides by and upholds the rules that govern trade, including rules governing CETA,” he said.
Mr. Hogan, who is in Canada to lead a delegation of 60 European food exporters, also said the EU is keeping a close eye on how Ottawa doles out new cheese-import permits. Under CETA, Europe won the right to export an additional 18,000 tonnes of duty-free cheese to Canada – the equivalent of roughly 2 per cent of Canada’s domestic market.
Canadians dairy farmers and processors want Ottawa to give all the new quota to domestic cheese makers, allowing them to import cheese from Europe, arguing that they are the ones most harmed by the trade concessions made to Europe. The permits would allow importers to make quick profits because cheese prices are generally much lower in Europe than Canada.
Canada imposes a 246-per-cent tariff on all cheese imports, except a small quantity that enters the country duty-free.
Giving these permits to Canadian cheese makers doesn’t sit well with many importers, who say that could give the domestic industry too much control.
Mr. Hogan said he warned Canadian officials against causing “unintended consequences” when it allocates import quotas.
More broadly, Mr. Hogan suggested that Canadian officials should look to Europe as an example of how to reform the supply-management system, which tightly regulates production and farm prices of dairy, chicken and eggs in Canada.
Europe has seen a surge in its dairy exports since it phased out dairy-production quotas in 2015, he pointed out.
“We see potential in the growing middle class, especially in the Far East, that we are able to fill because of our elimination of the restrictions on growth in our various sectors,” Mr. Hogan said. “Perhaps this is a model and a useful template for the Canadian authorities to examine.”
Canadian food and agricultural exporters are also poised to enjoy much greater access to the large European market, he added.
“We are here in good faith to expand trade opportunities between Canada and the EU,” he said. “It is a win-win scenario.”
Reuters. May 02, 2017. Canadian exports to rise by 6 per cent in 2017: EDC
OTTAWA — Strong commodity prices mean the value of Canadian goods exports will jump 6 percent in 2017 after a drop last year, Canada’s export credit agency said on Tuesday, playing down possible disruption to the North American Free Trade Agreement (NAFTA).
In its semi-annual forecast, Export Development Canada predicted exporters should benefit this year from a stronger U.S. economy and a weak Canadian dollar. Canada sends 75 percent of all goods exports to the United States.
Those exports shrank by 2.6 percent in 2016, pulled down in part by lower prices for a wide range of goods, including a 17.1 percent drop in energy.
“A main driver of export growth this year will be energy, with exports growing by an incredible 18 percent after a very weak 2016,” said the forecast.
Overall services exports should increase by 5 percent, slightly more than the 4.8 percent advance seen in 2016.
Canada’s export sector could be hit hard if U.S. President Donald Trump carries out a threat to withdraw from the NAFTA pact with Canada and Mexico.
Washington last week slapped tariffs on Canadian lumber exports and expressed unhappiness with what it calls unfair trading practices by Canada’s dairy farmers. Neither the dairy nor the lumber sectors are covered by NAFTA.
Export Development Canada chief economist Peter Hall said he was not overly worried by the potential for major changes to NAFTA, saying that while the administration was focusing on individual sectors, he saw little evidence of a real sustained desire to harm the bilateral trading relationship.
“Any time there is (a suggestion) that is going for the architecture of trade, that would actually inflict a lot of pain not just on those it’s aimed at but the domestic U.S. economy, there are repeated U-turns from those positions,” he said.
One example was the debate in Washington over imposing border tariffs, he added.
Last week, Trump said he pulled back from killing the 23-year-old trade pact with Canada and Mexico after requests from the two countries’ leaders and expressed optimism about winning better U.S. terms in a renegotiated deal.
BLOOMBERG. 2017 M05 2. Canada’s Export Agency Hikes Growth Forecast Despite Trump Threats
by Josh Wingrove
- Trade agency sees 6% growth in 2017, up from 3% previously
- Energy, aerospace and metals will be key drivers, EDC says
Canada’s export bank is doubling its growth forecast this year, a sign it doesn’t expect Donald Trump to upend globalization of trade.
Export Development Canada, in its spring 2017 report Tuesday, forecast the total value of Canadian goods and service exports to rise 6 percent in 2017 and 5 percent in 2018, buoyed by energy and aerospace. Shipments of metals and ores are also expected to rise significantly. The federal corporation’s previous report, released last fall, forecast 3 percent export growth for the current year.
The report titled “Globalization at the Brink?” is a nod to the headwinds Canada faces from Trump, amid looming renegotiation of the North American Free Trade Agreement and disputes over lumber and dairy rules. However, it concludes strength from the U.S., Europe and in developing markets creates an opening for exporters willing to shrug off the Trump factor.
“The opportunity for our companies is to stay around the table while everyone else is running scared,” Peter Hall, EDC vice-president and chief economist, said in an interview. In the U.S., positive signs include key demographic groups re-entering the labor force as industrial capacity tightens, while growth is catching on, too, in Europe.
“We’re not going to counsel Canadian firms to do crazy things, but we’ve had no reason to really depart from the story we’ve been telling,” Hall said. “We are a financial institution saying, ‘look, there are opportunities here.’”
EDC also forecasts Canadian gross domestic product to grow 2.4 percent this year and 2.2 percent in 2018, above the developed-markets average but trailing U.S. growth in that period.
Cash Injections
Canada’s expected export growth in 2017 will be driven largely by an 18 percent increase in the value of energy exports, in part due to a return to normal volumes after wildfires near Alberta’s oil sands last year, the report said.
The 2018 increase is due in large part to aerospace -- namely, Bombardier Inc.’s C Series airplane, Hall said. The program has received cash injections from both the Quebec and Canadian governments and is now the subject of an anti-dumping allegation from Boeing Co.
Total global GDP is forecast to grow at 3.5 percent in 2017 and 3.8 percent in 2018 -- strong figures at odds with protectionist political sentiment. GDP growth in emerging markets is projected to reach 5 percent in 2018, led by India at 7.6 percent, EDC said.
“Ultimately, the dissenting votes are about making the economy great again -- and that’s now happening, all on its own,” Hall wrote in the report. Economic data shows growth, jobs and continued expansion are already coming down the pipe -- despite threats to globalization and trade, the report said. “But if that risk is ultimately unlikely, this could be one of the greatest moments of opportunity in the new millennium.”
TPP. REUTERS. May 2, 2017. Pacific trade pact nations meet to discuss future without U.S.
OTTAWA (Reuters) - Negotiators from the remaining members of the Trans-Pacific Partnership (TPP) gathered in Canada on Tuesday seeking ways to boost free trade in the region after the United States pulled out of the 12-nation pact.
The withdrawal killed off years of negotiations and left the region looking for ways to deepen economic ties without a United States that appears increasingly suspicious of multilateral deals.
The two-day meeting of senior officials in Toronto will deliver recommendations in time for an Asian trade ministers' meeting in Vietnam later this month.
Japanese Finance Minister Taro Aso said last month Tokyo would not rule out the option of negotiating a TPP-type agreement without the United States.
Joseph Pickerill, chief spokesman for Canadian Trade Minister Francois-Philippe Champagne, said officials will be looking at what kind of free trade arrangement or framework for the region would receive the most support.
"I wouldn't characterize it as being TPP part two," he said.
Asked about the chances of pressing ahead with "a TPP-minus-one deal," Champagne said on Monday: "We're going to see, and that's why we're meeting next in Vietnam. But what's important now is to look at all options".
President Donald Trump pulled the United States out of the TPP in late January, complaining about "ridiculous trade deals" he said had damaged the U.S. economy.
In March, Canadian Foreign Minister Chrystia Freeland said the TPP as originally drawn up could not exist without U.S. ratification, adding that some "sort of other combination of TPP interested countries could happen".
(Reporting by David Ljunggren; Editing by Jonathan Oatis)
REUTERS. May 2, 2017. Oil stockpiles slip to five-year average if OPEC extends cuts: BP
By Ron Bousso and Karolin Schaps
LONDON (Reuters) - An extension of OPEC-led oil production cuts into the second half of 2017 would help bring global crude inventories back to a five-year average by the end of the year and support prices at about $55 a barrel, BP's chief financial officer said Tuesday.
Oil stocks have steadily built for nearly three years amid sharp production increases in the United States, Iraq, Iran, Brazil and other regions, sparking a slide in oil prices from above $100 in 2014 to $30 last year.
To reduce inventories to their five-year average, the Organization of the Petroleum Exporting Countries, Russia and other producers agreed to cut output by 1.8 million barrels per day (bpd) in the first half of 2017, a deal that helped lift prices to their current level of about $52.
With stockpiles still high, OPEC states have indicated those cuts could be extended to December.
"If OPEC cuts roll into the second half of the year we anticipate crude oil stocks would get back into the top end of the historical range," BP Chief Financial Officer Brian Gilvary said after the company reported a jump in profit.
"I wouldn't describe it as being majorly bullish, but it would certainly firm up and underpin prices from where they are today," he told Reuters. "If you look at total stocks right now, they are starting to decline."
Oil stockpiles in industrialized nations were 3.055 billion barrels at the end of February, about 330 million barrels above the five-year average but with the market showing more balance, the International Energy Agency said last month.
"If the OPEC cuts get rolled into the second half of the year that will underpin oil prices. If they don't get rolled into the second half of the year we will continue to see more volatility," Gilvary said.
OPEC and non-OPEC states meet on May 25 to discuss whether to extend cuts for another six months after June.
"From BP's perspective we're managing things around $50-55 a barrel, that's probably the range we would expect for the rest of the year," he said, adding that prices could climb to the upper end of the range around $55 if the cuts were extended.
Global oil demand is expected to grow by 1.3 million barrels per day this year, he added.
(Reporting by Ron Bousso; Editing by Edmund Blair)
REUTERS. May 2, 2017. Oil steady as OPEC, Russia cuts outweigh output elsewhere
By Christopher Johnson
LONDON (Reuters) - Oil prices steadied on Tuesday as lower production by Russia and major OPEC exporters balanced news of higher output in the United States, Canada and Libya.
Benchmark Brent crude oil LCOc1 was down 10 cents at $51.42 a barrel by 1345 GMT. The futures contract hit a one-month low of $50.45 last week after the restart of two Libyan oilfields. U.S. light crude CLc1 was 20 cents lower at $48.64.
The Organization of the Petroleum Exporting Countries and other producers including Russia have agreed to cut output by 1.8 million barrels per day (bpd) for the first half of 2017 to try to reduce a global glut.
OPEC oil output fell for a fourth straight month in April, a Reuters survey showed on Tuesday, dropping to 31.97 million bpd as Nigeria and Libya pumped less crude.
Russian oil production fell slightly last month to 11.00 million bpd, almost hitting its output target under the deal with OPEC, Energy Ministry data showed on Tuesday.
OPEC and other producers plan to meet on May 25 and are widely expected to keep output limits for the rest of the year.
BP Chief Financial Officer Brian Gilvary told Reuters on Tuesday that oil inventories would keep falling this year.
"If the OPEC cuts get rolled into the second half of the year, that will underpin oil prices," Gilvary said. "We are managing things around $50-$55 a barrel. That's probably the range we would expect for the rest of the year."
But oil market sentiment is fragile.
Libya's National Oil Company said on Monday production had risen above 760,000 bpd to its highest since December 2014, with plans to keep boosting production.
U.S. crude output C-OUT-T-EIA is at its highest since August 2015, while the Syncrude Canada oil sands project has started shipping crude from its Mildred Lake upgrader again after cutting production due to a fire in March.
U.S. crude inventories are expected to mark a fourth straight week of declines from a record high hit at the end of March, but stocks are still seen about 10 percent above year-end levels, according to Reuters calculations.
The American Petroleum Institute will release inventory data at 4:30 p.m. EDT (2030 GMT) on Tuesday.
(Additional reporting by Osamu Tsukimori in Tokyo; editing by Jason Neely and Louise Heavens)
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