Poor performance of export slowdown Canada’s GDP growth

Domestically-driven activity Canadian economy is still quite resilient. The consumer spending and housing activity remaining relatively buoyant, but weakness in exports and business investment are seen. Since exports of goods & services account for about a third of GDP, Caandan economy growth highly depend on performance of this sector.

An improving export performance remains key to a more positive economic outlook for Canada, especially since it would help take up the capacity needed to bolster business investment. 

During these slowdown period, Canadian businesses should increase their investments in productivity and enhancing initiatives like machinery, technology, and training - which are critical to boosting international competitiveness, suggests Scotiabank. 

A stronger and more sustainable U.S. rebound is paramount. According to Scotiabank, a reduction in exogenous shocks caused by recurring geopolitical issues would also be supportive. So would a firming up in growth around the world, especially in the Asia-Pacific region, which would eventually lead to an end to the supply consolidation which is undercutting commodity prices and the terms of trade that are so important to Canadian export earnings.

The Bank of Canada still has some manoeuvring room to implement more monetary accommodation, although another cut in the overnight rate may have only limited impact in helping to reinvigorate the lagging export and investment trends, argue Scotiabank.