While the deployment of vaccines is a “tremendously positive development” for Canada’s recovery, the governor of the Bank of Canada is urging B.C. business leaders to turn their attention to improving trade and exports to keep the economy humming.
“If struggling services exporters can hang on until a vaccine is widely available, Canada’s export performance could avoid the serial disappointment of the period that followed the global financial crisis [in 2008] and help cement a sustainable recovery,” Tiff Macklem said during a Tuesday (December 15) virtual address to the Greater Vancouver Board of Trade.
“Of course, this is by no means guaranteed. The rebound in goods exports could fizzle out as companies finish rebuilding inventories, while prolonged hardship could force many services exporters to close their doors.”
He urged B.C. business leaders to consider efforts to eliminate obstacles to interprovincial trade, invest in infrastructure and turn to its “well-educated and diverse workforce” to boost its competitiveness on the international stage.
“For the past four years, the policies and attitudes of the U.S. administration helped make Canada look more attractive to students and workers, giving us an advantage. With the incoming U.S. administration, Canadian schools and companies may have to fight harder to attract and retain talent,” the governor of the country’s central bank said.
While broader economic recovery has been unfolding as the central bank expected, Macklem said the current wave of COVID-19 that has triggered more restrictions throughout the country will weigh on the economy during the first quarter of 2021.
“It’ll certainly reduce growth and the economy could even slide backwards,” he said.
A forecast released Tuesday by RBC Economics pegs B.C.’s real GDP growth at -5.3% for 2020.
The provincial economy is expected to rebound in 2021 with growth of 5.1%, exceeding the national average of 5%.
By 2022, RBC expects B.C. to be the top-performing province with 5.2% growth.
Macklem, meanwhile, pointed to the $40-billion LNG Canada megaproject in Kitimat, B.C., as one initiative that will drive energy exports in the future.
“However, more needs to be done. I met with leaders of a number of logistics companies last month. They shared their concerns about bottlenecks, particularly at ports,” Macklem said.
“Fast-growing exports need reliable transportation infrastructure, including efficient, high-capacity ports and I know that both the Port of Vancouver and Port of Prince Rupert are working on major capacity expansions. This is encouraging. Boosting our export capacity also requires building the information and data infrastructure needed to compete in a digital world.”
He added that COVID-19 has been accelerating growth in Canada’s digital economy, putting more pressure on an international effort to improve the ability to measure the digital economy.
“It’s clear that digital services, including e-commerce, online education and application development, will be an important part of the future of trade. So will other B.C. specialties, such as video game production and animation studios,” Macklem said.
“With the explosion of remote office work, there are tremendous opportunities in areas such as cyber security, cloud computing and the development of virtual workplaces. Given the worldwide nature of the pandemic, advances in the digital economy can more easily become scalable, fast-growing exports.”
But Macklem emphasized that the disproportionate impact of the pandemic on trade in services compared with goods has significant implications for Canada.
“The recovery is going to be long and choppy. Nevertheless, there is room for cautious optimism that international trade will recover more quickly from the pandemic than it did from the global financial crisis, and Canadian businesses need to be ready,” he said.
