A forecast by Export Development Canada (EDC), released Thursday, predicts that the global economy is on the verge of a rush of economic growth.
While key risks still threaten the outlook, the forecast notes their declining severity thanks to increasing momentum and firmer growth fundamentals.
The forecast noted that OECD nations, accounting for roughly half of global GDP, are currently driving global growth with key indicators rising steadily for well over a year. The US economy is leading the charge, with growth predicted to increase from 3 per cent this year to just under 4 per cent in 2015.
Revived global trade is forecasted to reboot emerging market growth to 4.9 per cent in 2014 and 5.5 per cent in 2015.
EDC forecasts Canada’s GDP growth will accelerate from 2.2 per cent this year to 2.7 per cent in 2015. Export growth will reach 2.5 per cent this year and rise to 5.8 per cent in 2015.
Export Development Canada Spring 2014 Report
The strengthening recovery in the US housing sector and rising lumber demand from China are expected to sustain a remarkable boom in Canadian lumber exports. Meanwhile, pulp and paper shipments will receive a boost due largely
to the weakness in the Canadian dollar. Overall, total forestry exports are forecast to grow by 12 per cent in 2014 and 11 per cent in 2015.
For the first time since 2008, housing starts in the US are forecast to break the 1 million mark, reaching nearly 1.2 million in 2014 and 1.4 million in 2015. With demand from China growing by 6 per cent in 2013 for construction-related wood products, the outlook for Canadian lumber products is robust. This has resulted in a number of producers that have reopened shuttered mills and begun new investments, including Resolute expanding capacity at mills in Ontario and Quebec in 2014
and Tolko starting sales from its Athabasca plant near Slave Lake, Alberta.
While demand for lumber products is expected to be robust, fibre supply constraints from damage caused by the mountain pine beetle are starting to hit the forest sector in British Columbia. Mills in Houston and Quesnel, British Columbia, are expected to close by mid-2014 due to a lack of timber supply. More closings are expectedin the medium term which will reduce the volume of British Columbia’s lumber exports, but increase prices, just as demand is growing.
Pulp and paper exports are expected to benefit from a softer Canadian dollar in 2014. However, there is significant excess capacity worldwide for many forms of pulp, so growth will be subdued even as demand from China increases.
Many producers are investing in new technologies to increase efficiency of their current plants. An excellent example of this is Tembec’s $235-million 2014-15 investment program to increase efficiency at its Temiscaming, Quebec, pulp mill.