Canada’s non-resource-based exports see strong growth
Canadian non-resource-based exports saw strong growth over 2014 and 20151. As of November, non-resource-based exports were up 34.9% since January of 2014. Encouragingly, over this same period, strong growth has been seen across all major sub-categories of non-resource-based exports, with increases of:
- 49.9% in motor vehicles and parts;
- 30.9% in consumer goods;
- 27.6% in aircraft and other transportation;
- 24.1% in industrial machinery; and
- 21.9% in electronic and electrical equipment and parts.
The gains in non-resource-based merchandise exports are largely attributable to two factors. Firstly, non-resource-based exports have benefited from a reviving U.S. economy. In 2014 U.S. real GDP expanded 2.4%, and more recently, U.S. real GDP expanded 3.9% in the second quarter and 2.0% in the third quarter of 2015. Secondly, Canadian non-resource-based exports have benefited from a depreciating Canadian dollar, making Canadian goods more competitive relative to U.S. products.
Monthly Merchandise Exports,
Resource-based and Non-resource-based
(BOP Basis, Seasonally adjusted)
Source: Office of the Chief Economist, Global Affairs Canada
Data: Statistics Canada
The loonie has depreciated 17.6% from 0.91 US$ in January 2014 to 0.75 US$ as of November.
In contrast, while non-resource-exports increased, Canada’s resource-based exports have been in decline. Since their most recent peak in July of 2014, resource-based-exports have fallen 21.5% as of November 2015. This decline has been largely a function of falling prices, particularly oil prices, but also of metals and other commodities. According to the Bank of Canada Commodity Price Index, commodity prices declined 46.5% from July 2014 to November 2015, while energy prices fell 57.5% and metals and minerals prices were down 21.4% over the same period.
As a result of these two trends, as of September, non-resource-based exports constituted a larger share of Canadian exports than resource-based exports for the first time since March 2006.
With suppressed commodity prices expected to continue into the future, strong export performance in non-resource-based sectors will be a well-needed boost for the Canadian economy.
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1 Calculated using seasonally adjusted, balance of payments data from Statistics Canada CANSIM table 228-0059. Non-resource based exports are defined as categories C17 to C24, while resource-based exports are defined as NAPCs categories C11 to C16.
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