How is the Strong Currency Affecting Canadas Economy and Forest Products Industry?
We remain surprised that the strong dollar hasn’t throttled the Canadian expansion. In the year through 2007Q1, real consumer spending has increased by 4.5%. Nor has Canada’s important export sector wilted. Exports to the US account for 81% of Canada’s total; this is equivalent to about 30% of its GDP. Nevertheless, the surging loonie has not doomed the trade sector because Canada has increasingly diversified its exports. In the 12 months ending in May, total Canadian merchandise exports increased by 8.1%. Exports to the US increased by only 2.3% while exports to the rest of the world surged. Unfortunately for Canadian forest products producers, the composition of Canada’s exports has also been changing. From 2002 through 2006, the forest products share of total exports has declined from 9% to 7% while the energy share has increased from 12% to 19%. That trend has accelerated in recent times. In the twelve months through May 2007, Canada’s energy exports have increased by 11% while its
