Growing Canada’s Exports to Overseas Markets by 50 Percent - 2019 Update
Tuan Tran
Economist, Trade and Economic Analysis Division
2020-03-03
Table of Contents
1. Key Summary
- In 2019, Canadian exports of goods and services to overseasFootnote 1 markets grew 1.1 percent, underperforming the 5.2 percent growth rate required to reach the overseas exports growth target.
- While lower exports to China in 2019 was one of the main factors for this underperformance, exports to overseas markets outside of China only grew by 3.7 percent.
- With weak global economic conditions expected as a result of the spread of COVID-19, 2020 is expected to be another difficult year for Canadian exporters to overseas markets.
2. Introduction
In the Fall Economic Statement 2018, the Government of Canada set a target of increasing by 50 percent Canada’s overseas exports by 2025. In a previous report, this target was benchmarked against forecasts and Canada’s historical export performance. This briefing note provides an update on Canada’s progress towards meeting that target.
3. Canada’s Overseas Export Performance since 2017
In 2017, the last full year of available data at the release of the Fall Economic Statement 2018, Canada exported $194 billion of goods and services to overseas markets. A 50 percent increase means that Canadian exports to overseas markets must reach $291 billion by 2025, representing a 5.2 percent annual growth rate. Strong growth in exports to overseas markets in 2018 gave Canada a good start toward reaching the target – over performing the 5.2 percent required growth rate by $4.3 billion.
Based on recently released data, Canada’s exports to overseas market only grew by 1.1 percent in 2019, undershooting the annual growth rate needed to reach the set target. Due to thee weak growth experienced in 2019, the annual growth rate now required to reach the 2025 target has increased to 5.4 percent.
Figure 1: Canada's Overseas Goods and Services Exports
Data: Statistics Canada, Table 36-10-0014-01
Source: 抖淫视频, Office of the Chief Economist
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| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
| Canadian Exports of Goods and Services to overseas market ($ millions) | 194,048 | 210,448 | 212,867 | ||||||
| Annual target for Canadian Exports of Goods and Services to overseas market ($ millions) | 194,048 | 206,176 | 218,304 | 230,432 | 242,560 | 254,688 | 266,816 | 278,944 | 291,072 |
The over-performance in 2018 and under-performance in 2019 can both be attributed to goods exports, which grew 9.7 percent in 2018 but declined 0.7 percent in 2019. On the other hand, the growth in Canada’s services exports to overseas markets has been more consistent, reaching 5.2 percent in 2018 and 6.0 percent in 2019. However, services still accounted for only 29 percent of overall overseas exports in 2019.
Global economic conditions were not supportive of Canada’s overseas exports in 2019. Estimated at 2.9 percent for 2019, global economic growth, with most major economies having now reported their growth data for 2019, is expected to have been the lowest since the Global Financial crisis. Trade and geo-political tensions, idiosyncratic stress in various emerging markets, social unrest, and natural disasters weighted on business confidence, investment decisions, global trade, and industrial production. Furthermore, the U.S. economy grew 2.3 percent in 2019, a much higher pace than many overseas advanced economies, drawing in more Canadian exports in 2019. Canada’s exports to China faced particularly strong constraints and decreased by 11.0 percent in 2019. Excluding exports to China, Canada’s exports to overseas markets grew 3.7 percent in 2019.
Figure 2: GDP Growth Forecast, Selected Trade Partners
Data: OECD Interim Economic Outlook Forecasts, March 2020
Source: 抖淫视频, Office of the Chief Economist
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| 2019 estimated GDP growth (%) | 2020 forecasted GDP growth (%) | |
| World | 2.9 | 2.4 |
| United States | 2.3 | 1.9 |
| Mexico | -0.1 | 0.7 |
| Euro Area | 1.2 | 0.8 |
| United Kingdom | 1.4 | 0.8 |
| Japan | 0.7 | 0.2 |
| South Korea | 2.0 | 2.0 |
| China | 6.1 | 4.9 |
| India | 4.9 | 5.1 |
| Brazil | 1.1 | 1.7 |
Global economic conditions in 2020 could be even more challenging for meeting the FES target. The OECD’s most recent forecast calls for global economic growth to fall to 2.4 percent in 2020, down from an already weak 2.9 percent. The outbreak of COVID-19 is expected to bring China’s economic growth to 4.9 percent, the lowest since the political turmoil in the early 1990s. With recent outbreaks in South Korea, Italy, Iran, and many other locations, the impact of COVID-19 on the global economy could be greater than currently forecasted. Disruptions in global supply chains, and reduced demand for travel and commodities are some of the expected economic impacts from the spread of COVID-19.
Looking forward, Canada’s exports of goods and services will need to grow 5.4 percent on average until 2025, but 2020 is already looking to be a challenging year to achieve such growth. However, Canadian exports of services have been growing steadily and are representing a larger share of Canada’s exports. Furthermore, Canada’s exports to CETA and CPTTP partners for goods that enjoyed tariff reductions have performed well, which could provide additional support for Canadian export growth in coming years.
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