Export Development Canada chief economist Peter Hall said we are on the verge of a U.S.-led economic recovery that could come as early as next year.
And Canadian manufacturers and exporters stand to benefit by it.
In an April 25 breakfast speech in Sudbury, Hall said Europe may be in the midst of austerity turmoil, but one of the world's greatest growth engine still resides south of the border.
The fiscal belt-tightening and modest growth projections tied to the 'New Normal' thinking has caused a crisis of confidence in the normally-buoyant U.S. economy, but the signs of optimism are still there and Canada must prepare itself.
“This could be Canada's decade, or century.”
The U.S. housing market, normally good for 1.4 million unit per year, but buried since the 2008 economic crash, has been producing at a steady 550,000 units annually for the last three years.
Hall said the U.S. economy can only “under-build for so long” and already there are signs of pent-up demand in cities like Minneapolis, Phoenix and Denver. He projects homebuilding rates will increase by 14 per cent.
“If we're right, it's time to buckle up.”
Hall predicts “double-digit” growth for Canadian lumber producers.
American consumer spending is showing an encouraging growth rate of 5.2 per cent over the last eight to nine months, which means a huge trajectory for the auto sector with the average age of an American car at 10 years.
“That's good news for the Ontario economy. Lots of metal goes in those cars.”
Hall forecasts today's skyrocketing mineral commodity prices will slide, “but not crash,” to more reasonable levels. Resource development will continue unabated.
“We can't find a project that's going to be interrupted.”
He said the Canadian dollar should also fall slightly to 97 cents US by 2013.
The most exciting aspect has been the diversification of Canada trade patterns away from a mostly U.S. dominated market.
Canadian exports to emerging countries amounted to only four per cent in 2000.
Last year, it was 11 per cent, and Hall said it's forecasted to increase to 22 per cent by 2020, and north of 30 per cent of 2025.
Hall predicts Ontario exports this year and 2013 will be 9 per cent, the highest in Canada.
“There's a revolution going on international trade.”
There remain obstacles to growth, mainly the European debt crisis and political uncertainty in the Middle East.
In his post-presentation Q & A session, Hall said labour constraints for Canadian companies only stand to get worse and immigration won't solve this immediate problem.
He sided with Bank of Canada Governor Mark Carney's recent remarks in Waterloo that Canada must re-train, re-tool, re-invest in innovation, but use domestic labour sparingly.
Hall floated the controversial notion of “importing labour without moving it,” by farming out more labour-intensive manufacturing to emerging countries like India and its 600-million strong workforce.
While Ontario is reticent to make that leap, Canadian manufacturers are realizing that China is rapidly running out of cheap labour.
