* 2012 export-growth forecast cut to 4.6 pct from 7.21 pct
* Agency says U.S. rebound will help Canadian exporters
By David Ljunggren
OTTAWA, Oct 30 Canada's export credit agency cut
its 2012 forecast for growth in exports of goods and services on
Tuesday in the wake of the European crisis, but it said
exporters will see benefits next year from a recovery in the
U.S. private sector.
Export Development Canada said 2012 exports would increase
by 4.6 percent from 2011, down from the 7.1 percent it forecast
in April. The agency also cut its 2013 export growth forecast to
6.3 percent from an earlier 7.3 percent.
Canada is heavily dependent on exports of goods and
services, which accounted for just over 31 percent of gross
domestic product in 2011. Around 75 percent of all exports go to
the United States.
Canada, bolstered by the huge U.S. market, ran trade
surpluses for more than three decades until the economic crisis
of 2008. In December of that year it posted a deficit, the first
since March 1976, and since then has put in a much more mixed
performance as the economy of its largest trading partner has
Exporters are finding it hard to compete because of the
strength of the Canadian dollar, increased competition, and weak
markets. Canada recorded five straight trade deficits from April
"We had a very soft underbelly in the economy in the
summer," the agency's chief economist, Peter Hall, said in a
phone interview, referring to investor concerns about U.S. debt
and about the Greek election in June.
"There was a lot of worry ... but what we are seeing now is
that that indeed was a temporary event."
Hall said Canada's close ties to the United States mean
exporters will benefit as the recovery there takes hold.
Real U.S. retail sales have grown at an 8 percent annualized
rate for the last three months, while housing construction is up
35 percent year-over-year, he said. Canada is a major supplier
of building materials to the United States.
U.S. corporations, Hall said, are sitting on $5.7 trillion
worth of cash.
"You take a slight sliver of that and that has a dramatic
impact. That's the way we're adding things up ... How can you
possibly have aggressive growth numbers like that and see GDP at
2 percent or less going forward?" he said.
EDC says the U.S. economy will expand by 2.8 percent in 2013
following 2.3 percent growth this year.
"The Canadian trade numbers don't look great at the moment
and certainly the third quarter numbers are very disturbing. But
when we put it in context, there is no reason that we have to
believe that that should continue, given what's going on in the
United States," Hall said.
The EDC forecast Canadian growth of 2 percent in 2012 and
2.2 percent in 2013. It said the Canadian dollar will dip from
parity with the U.S. dollar this year to 97 U.S. cents next