Free Trial

MNI INTERVIEW: Canada Export Windfall Over, Dollar Weakens-EDC


Canada's biggest export boom in four decades from the windfall of high commodity prices is ending, though shipment volumes will find support from a currency weakened by a central bank lagging the Fed on rate hikes, the government trade bank's chief economist told MNI.

Shipments growth will slow to 0.9% following gains of around 20% in the prior two years, Stuart Bergman of Export Development Canada said in a phone interview. Energy and metals prices are seen fading after a surge linked to the pandemic rebound and the Ukraine invasion, though fertilizer demand remains solid, he said.

Canada's dollar will weaken four cents on average this year against the U.S. dollar to about 73 cents or CAD1.37, he said. EDC is the most prominent government body that forecasts the currency, something the central bank doesn't do. Canada is one of the most trade-reliant advanced economies, though three-quarters of its exports are bound for its southern neighbor the U.S.

“Most of that decline, it’s the relative policy on the monetary policy side,” Bergman said of the currency depreciation. The Bank of Canada's rate pause that began in January will continue until the first quarter of 2024 while the Fed hikes one more time in June, he said. (See: MNI INTERVIEW: Firms See Canada Skirting Slump & More BOC Pain)


“On the Bank of Canada side we have no reason to doubt the Governor in his word that he’s keeping rates on hold,” Bergman said. “On a relative basis, you have the Fed more aggressive let’s say than the Bank of Canada and that gives the U.S. dollar strength against the loonie,” he said in reference to the bird shown on Canada's one-dollar coin.

The weaker currency will help with shipment volumes and along with a global economic pickup late next year bring exports back to more normal growth of 4% in 2024, he said. “Exports will remain healthy and remember it’s the physical shipments that actually generates a lot of the economic activity in Canada.”

Exports led Canada's first-quarter GDP growth and the boom has helped keep the country's jobless rate near record lows. Many private economists like Bergman still see a slowdown over this year and downside risks in the global economy.

“We do have concerns around the global consumer," Bergman said. "Drivers that have been behind the global consumer for the last couple of years, low interest rates for example, the housing market is another good one, seem to be dissipating if not disappearing completely. And so, there is downside risk there if the consumer hits a wall and global growth takes a hit in the next six to 12 months.”

Other global worries around the reversal of trade liberalization appear overblown, he said. "De-risking" of single-sourced supply chains for example appears more likely than the "de-globalizing" of trade, he said.

MNI Ottawa Bureau | +1 613-314-9647 |
MNI Ottawa Bureau | +1 613-314-9647 |

To read the full story

Why Subscribe to


MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.