Canada will see a sharp drop in exports due to weak economic conditions of its major importers. But the country can utilize it as an opportunity to forge business relations with developing nations.
The Export Development Canada has predicted a grim outlook for Canadian exports resulting in an 18% slump all through 2008, followed by an additional 4% decline in 2009, reported ReportOnBusines. Canadian energy exports will witness a particularly spectacular turnaround, wherein a 40% boost in Canadian export earnings will be followed by a 7% slump in 2009. Crude oil costs are also expected to suffer the most striking reversal, dropping to the $100 mark towards the close of 2008 and then falling further in 2009 to $84.
The primary reasons for falling Canadian exports are that demand for consumer products, vehicles, forestry and cutting-edge technology sectors are going to be affected most adversely in the latter half of 2008 due to soaring consumer goods prices, the propagation of US economic troubles, and a firm Canadian dollar. There has been a marked fall in the volume of orders from US households (the largest importers of Canadian products) for Canadian furnishing products for a while now and demand for the Canadian products will decline further during the forecasted period.
Another main reason for the falling Canadian exports is the downward descend of oil prices, given that oil exports is one of Canada’s main economy generation sources. The growing businesses in developing nations, which are giving a serious competition to the Canadian companies all over the world, is also believed to be yet another reason for the fall in the demand for Canadian products.
Nevertheless, besides the poor forecast for Canadian exports, it is believed that developing markets like Brazil, China, India and Russia will furnish Canadian exporters with sound business than struggling developed markets like the European Union, Japan and the USA.
As per financial analyst at RNCOS, “The Canadian businesses are facing several challenges due to the poor economic conditions of its importers. The declining exports are reducing the overall incoming of foreign currency in the country. Hence, Canadian exporters need to cash their businesses with robust developing markets such as India and China. This would also provide a good opportunity to start their business relationship with these developing countries.”
