MNI INTERVIEW: EDC Economist Sees Investment Boost From 2020

By Yali N'Diaye

     OTTAWA (MNI) - The new United States-Mexico-Canada trade agreement removes

uncertainty for Canadian companies, and should boost business investment from

late 2019 through 2021, the chief economist at Canada's export agency said.

     "We absolutely do expect that there is going to be a wave of investment

that comes through as a result of the signing of the deal," Peter Hall, from

Export Development Canada, told MNI.

     "A lot of money has been piling up" as firms were unsure whether to expand

in Canada or elsewhere, or to upgrade their facilities or not. "Some or all of

that investment is actually going to occur," Hall predicted.

     "Toward the end of 2019 we start to see some of the impact," with most of

it likely to be felt in 2020 and 2021, he said, noting that companies need time

to obtain funding and permits for new projects.

     --FACTORY INVESTMENT

     Investment in machinery and equipment can happen more quickly, but not

without a six- to 12-month delay, he said, pointing out that much of the

machinery and equipment deployed in Canada is imported.

     Based on conversations with businesses, Hall told MNI the added investment

will be "tilting more towards the expansion of plants."

     In spite of all of the risk and concerns during the North American Free

Trade Agreement renegotiation process, exports "have not suffered", Hall told

MNI, saying Export Development Canada's export forecasts had already assumed an

agreement would be reached.

     After a weak summer in 2017, when exports declined between June and

September, they have been mostly increasing, although Statistics Canada reported

Friday a 1.1% decline in August, which owed mostly to "atypical shutdowns" in

the auto sector. Real exports contracted 0.7% on the month, but rose 0.2%

excluding autos and parts.

     Imports of machinery, equipment and parts declined 0.5%, with volumes down

0.3%, following gains of 1.2% in both July and June.

     Hall expects 2% GDP growth in 2018 and 2019.

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

[TOPICS: M$C$$$,MX$$$$]