“It’s different this time.” That was how Peter Hall, Vice-President and Chief Economist for Export Development Canada introduced his presentation at a recent Burlington Economic Development Corporation breakfast.
The promise of ‘different’ got everyone’s attention. Hall believes that things are finally on the way up with a revival of confidence pointing to a new upsurge of growth. Americans have had a gloomy outlook the past five years, but that is changing with a renewed confidence– evident also, in the European and Japanese business markets.
Weather stymied growth in 2011 and 2013 and was again a factor in early 2014. Hall sees a glut of pent-up demand and this suppressed level of activity is only now being realized and cited the U.S. housing and automotive markets as good examples. Consider that the average age of a car in the United States is ten years old. Business has been using up industrial capacity, but orders are increasing and will only be met through investment. Hall believes we are on the cusp of a wave of investment spending, noting that we should: “Watch India. When the new government comes in, it will re-engage growth. India will be the economy of the future.”
“Ready for white water?” Hall continued his talk with a striking analogy. EDC uses a visual of a kayaker lulled into complacency by a seemingly endless placid lake when suddenly faced with a torrent of white water. Hall said that like the kayaker, “Growth is poised to arrive in a very big rush, and take us all by surprise.” His message: companies who can successfully navigate the obstacles presented with global growth will be the big winners.
One potential barrier would be the reaction of the central banks (should growth trigger their withdrawal of liquidity required to keep the post-crisis economy upright). Hall expressed caution in that we should all keep eyes on credit with the certainty that there will be an unwinding of quantitative easing and a drawing down of the Canadian dollar. As a result, a trade dividend would be coming.
The sleeper in this is the agri-food industries in Ontario. Hall believes that there is a lot of potential in the global markets. Historically, the outlook has not always been so optimistic.
All in all, Hall delivered a good news story for Canadian businesses. To read the report on which his presentation was based, visit: edc.ca/GEF