Canadian service industries are set to see a global trade boost over the next several years, and companies would be wise to look into opportunities in these sectors, according to an HSBC report released December 14.
While goods exports make up the lion’s share of Canadian sales to other countries, service exports are growing at a faster rate. Service exports from Canada are forecast to grow at a rate of 7% annually between now and 2030, with the strongest growth coming from the financial, tourism and transportation sectors. Other service industries set to benefit from increased exports include software development and construction.
In 2015, 60% of total Canadian service exports went to the United States, and 75% of all service imports were from the U.S.
“Given the close ties between the two countries, it wasn’t at all surprising that most services exports are for the U.S. market,” said Andrew Skinner, HSBC Bank Canada’s head of global trade and receivables finance.
“We spend a lot of time as a country talking about resources and large manufacturing and their impact on our economy, but some of the most dynamic global trade stories in recent years are in the service sectors.”
The second largest market for Canadian service exports is the European Union. Service exports to China are expected to increase 10% per year between 2020 and 2030.
While service exports from Canada grew 1% this year, merchandise exports shrank 3%. Goods exports can recover and increase 3% in 2017 and 6% annually through 2030, but only if “governments refrain from introducing new impediments to trade,” according to HSBC.
“If new tariff and non-tariff barriers are implemented, whether due to U.S. trade policy changes proffered by president-elect Donald Trump or a so-called ‘hard Brexit’ in the U.K., the combined value of goods and services trade in 2030 could drop by 3% to US$48.8 trillion from a current projection of US$50 trillion,” the bank said in its report.
@EmmaHampelBIV
Check out BIV’s podcast for the week of December 13, 2016:
