Looking for Recovery and Growth

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By Peter G. Hall *
EDC Vice-President and Chief Economist

In final hours of May, there are two things: preparations being made everywhere for the Canadian summer, and EDC wrapping up our Let’s Talk Exports tour across the country. This year’s tour took me to 18 cities from coast to coast, where I was again able to meet many Commentary readers face to face. Not only was I able to share our latest thoughts on the economy, but I had the privilege of listening to your valuable insights. What did I hear?

Two key messages came across loud and clear, and were mentioned – for the most part with no prompting – in every location I visited. First, businesses in every region and industry talked about the strong pace of activity. Orders are up, but there was almost a shyness about it. I was able to offer reasons why, and to add why we believe it will be sustained.

The second message was more sobering. Audiences were concerned about labour shortages, particularly for skilled workers. Some consider this a good problem to have, as it reinforces the growth message. Not our audiences – they were more circumspect, especially considering that true global recovery has yet to occur.

Once again, question-and-answer sessions at the end of presentations were lively. The most-often asked questions were about the US economy, no surprise given the revival of US growth. Questions varied from the election to the rise of the housing market, ongoing protectionism and recent wobbles in the labour market. We remain keenly interested in our number one market!

Next on the list was concern about inflation and the future path of interest rates. Over the period of the global slowdown, it seemed well understood that rates would be low for a long period of time. If anything, what our delegates seemed to be inferring is that the growth they are seeing is likely to stay – in which case, rates are not likely in their view to stay this low for too much longer.

Another popular question was Canadian labour markets. More than once, our audiences lamented long hiring processes for skilled workers, a new development that businesses are finding difficult to cope with. Many are hoping that immigration strategies and training through educational institutions and other programs will provide the needed workers – but company-level strategies seemed to revolve around increasing pay packages. Perhaps another reason for inflation concerns.

China was on the minds of many. Slowdown across the Pacific has many of our session attendees worried, and questions were accompanied by requests for industry-specific impacts. Delegates seemed comforted by our view that the slowdown simultaneously hitting the large emerging markets is temporary, and will be aided by the economic recovery coming up in 2013.

I was quizzed repeatedly about our view that commodity prices will actually ease back in the recovery period – an atypical movement, but based on our perception of the effects of ‘quantitative tightening’. This then led to questions about the Canadian dollar, which we feel will follow the same direction.

The bottom line? Many other questions were asked – when it comes to the world economy, there is a lot to ask, and a lot to say. But as the world continues to grapple with significant risks, it is also comforting to know that there is solid growth, and that our eyes are collectively looking to recovery.

The views expressed here are those of the author, and not necessarily of Export Development Canada.



Vol. 12 - No. 3


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