A report from the Canadian Imperial Bank of Commerce Capital Markets has issued a statement to Canada; if the country doesn’t up its export game, currency exchange Ottawa and across the country will be seeing the Canadian dollar, or the loonie, continue dropping, possibly hitting US$0.70 within the next decade.
According to the report, authored by CIBC Capital Markets economists Royce Mendes and Avery Shenfeld, Canada’s exportation hasn’t really kept up with the rest of the world, with slow growth since the turn of the millennium, save for the country’s bounce-back following the recession. The issue, they say, in the country seeing a lack of new facilities like offices and factories opening up in the country, which Canada needs to expand its export capability
According to the report, Canada’s exports and industrial capacity have gone done in all but a few sectors since the latter half of the 90s, which has lead to people in the industry questioning whether or not the country still be a enticing development location for such facilities today.
While there has been some celebration in Canada thanks to a few successes, Canada’s imports to the US have gone done from about 20% around the start of the 00s, as today it only sits at about 13%. In the automobile manufacturing industry, in particular, Canada’s assembly plants produce about a million units less, with the employment in the sector behind by about 100,000 jobs.
Other problems include the Canada’s activity in the US Market superseded by trade from other, lower-cost countries, like Mexico. The report simplifies this, saying that Canada’s export volumes have grown in such a slow rate that most plants pack up and relocate.
The report says that that if Canada can’t tip the scale to their favor, they can, at least, get the market to do it for them. A poor current account will, in time, result in a Canadian dollar that’s weaker than its competition. It would be better that the country had other things going for it that would support exports, rather than letting the dollar do the work. The loonie’s current state isn’t able to handle much foreign spending, with the report forecasting that currency exchange Ottawa and across the country could see the loonie drop until it hits US$0.60 by the 2020s.
Suggestions for dealing with the issue from the report include targeted support and improvements to training and education, with a focus on tech-related services, as well as streamlining government processing, lowering corporate taxation, and improving business infrastructure in the country.